The dollar index (DXY00) on Tuesday fell by -0.21%. The dollar Tuesday fell moderately as lower T-note yields weighed on the dollar’s interest rate differentials. However, the dollar had underlying support as weakness in stocks boosted liquidity demand for the dollar.
Tuesday’s U.S. economic news was mixed for the dollar. On the bearish side, the Jan Richmond Fed manufacturing index fell -12 to a 2-1/2 year low of -11, weaker than expectations of -5. Conversely, the Jan S&P Global manufacturing PMI unexpectedly rose +0.6 to 46.8, stronger than expectations of a decline to 46.0.
EUR/USD (^EURUSD) on Tuesday rose by +0.07% but remained just below Monday’s 9-month high. A weaker dollar Tuesday was supportive of the euro. EUR/USD also found support Tuesday from a Bloomberg report that said the German government on Wednesday would revise its 2023 German GDP estimate to show growth of +0.2% versus an October projection of -0.4% contraction.
Tuesday’s economic news was mostly supportive of EUR/USD. The Eurozone Jan S&P Global manufacturing PMI rose +1.0 to a 5-month high of 48.8, stronger than expectations of 48.5. Also, the Jan S&P Global composite PMI rose +0.9 to 50.2, stronger than expectations of 49.8 and the strongest pace of expansion in 7 months. In addition, German Feb GfK consumer confidence rose +3.7 to a 6-month high of -33.9, slightly weaker than expectations of -33.3.
USD/JPY (^USDJPY) on Tuesday fell by -0.43%. The yen Tuesday posted moderate gains on lower T-note yields. Also, higher JGB bond yields Tuesday were supportive of the yen. In addition, Tuesday’s economic news that showed the Jan Jibun Bank composite PMI rose from contraction territory for the first time in three months was bullish for the yen.
The Japan Jan Jibun Bank manufacturing PMI was unchanged at 48.9, the steepest pace of contraction in more than two years. However, the Jan Jibun Bank composite PMI rose +1.1 to a 3-month high of 50.8.
February gold (GCG3) on Tuesday closed up +6.80 (+0.35%), and March silver (SIH23) closed up +0.195 (+0.83%). Precious metals Tuesday closed moderately higher, with gold climbing to a 9-month high. A weaker dollar Tuesday was supportive for metals prices. Also, lower global bond yields were bullish for metals prices. Stronger than expected economic news Tuesday on U.S. and Eurozone S&P Global manufacturing activity was positive for industrial metals demand and bullish for silver prices.
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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