The dollar index (DXY00) on Friday rose by +0.39%. The dollar Friday rallied moderately after the 10-year T-note yield climbed to a 5-week high, strengthening the dollar’s interest rate differentials. The dollar also garnered support from Friday’s report that showed the University of Michigan U.S. Feb consumer sentiment rose more than expected to a 13-month high. In addition, hawkish comments from Philadelphia Fed President Harker gave the dollar a boost when he said the Fed must raise the fed funds rate above 5% and keep it there.
The University of Michigan U.S. Feb consumer sentiment rose +1.5 to a 13-month high of 66.4, stronger than expectations of 65.0.
The University of Michigan U.S. Feb 1-year inflation expectations rose +0.3 to 4.2%, above expectations of 4.0%. The 5-10 year inflation expectations were unchanged at 2.9%, right on expectations.
Philadelphia Fed President Harker said the fed funds rate must get above 5% and stay there to ensure price pressures ease.
EUR/USD (^EURUSD) on Friday fell by -0.30%. The euro Friday tumbled to a 1-month low against the dollar after ECB Governing Council member de Cos said European government support measures to help economies through the energy crisis should be gradually rolled back as prices fall. Reducing government support might undercut economic activity that would be bearish for the euro. Also, concerns about an escalation of the Russia-Ukraine war weighed on EUR/USD after Ukraine said two missiles that Russia fired into Ukraine on Friday crossed over Romania.
Italy Dec industrial production rose +1.6% m/m, stronger than expectations of +0.1% m/m.
ECB Executive Board member Schnabel said the ECB "will keep interest rates high until we see robust evidence that underlying inflation returns to our target in a timely and durable manner."
ECB Governing Council member de Cos said European government support measures to help economies through the energy crisis should be gradually rolled back as prices fall.
ECB Governing Council member Vujcic said the ECB would probably continue raising interest rates after a planned 50 bp rate hike at next month's policy meeting.
USD/JPY (^USDJPY) on Friday fell by -0.11%. The yen Friday rose moderately after Japanese Prime Minister Kishida nominated former BOJ member Ueda to be BOJ Governor after Deputy BOJ Governor Amamiya turned down an offer for the post. Ueda is considered more hawkish than Amamiya. However, the yen relinquished most of its gains Friday after the 10-year T-note rose to a 5-week high.
Friday’s Japanese economic news was dovish for BOJ policy and bearish for the yen after Japan's Jan PPI rose +9.5% y/y, weaker than expectations of +9.7% y/y and the slowest pace of increase in 6 months.
April gold (GCJ3) on Friday closed down -4.00 (-0.21%), and March silver (SIH23) closed down -0.068 (-0.31%). Precious metals Friday closed moderately lower. A stronger dollar Friday weighed on metals prices. Also, higher global bond yields Friday were bearish for metals. In addition, hawkish comments from ECB Executive Board member Schnabel and ECB Governing Council member Vujcic undercut precious metals when they both said they supported tighter ECB policy.
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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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