The dollar index (DXY00) on Thursday rose by +0.53%. The dollar Thursday recovered from a 9-1/4 month low and moved moderately higher. The dollar rose Thursday on better-than-expected U.S. economic reports on weekly jobless claims and Q4 nonfarm productivity. Also, dovish comments Thursday from ECB President Lagarde weakened the euro and boosted the dollar. Â
Thursday’s U.S. economic news was mostly bullish for the dollar. Weekly initial unemployment claims unexpectedly fell -3,000 to a 9-month low of 183,000, showing a stronger labor market than expectations of an increase to 195,000. Also, Q4 nonfarm productivity rose +3.0% q/q, stronger than expectations of +2.4% q/q. Q4 unit labor costs rose +1.1% q/q, weaker than expectations of +1.5% q/q. In addition, Dec factory orders rose +1.8% m/m, the largest increase in 6 months but weaker than expectations of +2.3% m/m.
EUR/USD (^EURUSD) on Thursday fell by -0.75%.  The euro Thursday fell back from a 10-month high and posted moderate losses.  EUR/USD weakened after ECB President Lagarde said risks to inflation and the Eurozone economic outlook were balanced, which fueled speculation the ECB may be close to ending its rate hike campaign. EUR/USD on Thursday initially rallied to a 10-month high after the ECB raised interest rates by 50 bp and said it would also raise rates by 50 bp at its March meeting.
German trade news Thursday was weaker than expected and bearish for the euro after German Dec exports fell -6.3% m/m, weaker than expectations of -3.0% m/m and the biggest decline in more than 2-1/2 years. Also, Dec imports fell -6.1% m/m, weaker than expectations of -1.8% m/m and the biggest decline in more than 2-1/2 years.
The ECB, as expected, raised the main refinancing rate by 50 bp to 3.00% and said it also intends to raise rates by 50 by at its March meeting.
ECB President Lagarde said risks to the Eurozone’s growth outlook and inflation risks have become more balanced.
USD/JPY (^USDJPY) on Thursday fell by -0.26%.  The yen Thursday moved higher for the third consecutive session and posted a 2-week high against the dollar. A slump in T-note yields Thursday was bullish for the yen. The yen also rallied Thursday after Wednesday’s comments from Fed Chair Powell fueled speculation the Fed was close to ending its rate hike campaign.
April gold (GCJ3) on Thursday closed down -12.00 (-0.62%), and March silver (SIH23) closed up +0.006 (+0.03%). Precious metals Thursday settled mixed, with silver posting a 1-month high. Gold prices Thursday fell back from a 9-1/2 month high after the dollar rebounded from a 9-1/4 month low and moved higher. Also, a rally in stocks Thursday reduced the safe-haven demand for precious metals. Gold prices Thursday initially rallied to a 9-1/2 month high on speculation the Fed and ECB will end their interest rate hike campaigns later this year on dovish comments from Fed Chair Powell and ECB President Lagarde. Lower global bond yields Thursday were also supportive of metals prices.
More Forex News from Barchart
- Australian Dollar Crawls Higher Against the U.S. Dollar in Early 2023
- Stocks Rally and Bond Yields Fall on Speculation Rate Hikes Nearing an End
- Dollar Tanks on Weak U.S. Economic Reports and Dovish Powell
- Stocks Moderately Lower on Mixed Economic News Ahead of FOMC
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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