The dollar index (DXY00) on Monday fell by -0.29%. The dollar was under pressure Monday after a rally in stocks reduced the liquidity demand for the dollar. Also, lower T-note yields Monday weakened the dollar’s interest rate differentials. However, short covering in the dollar limited its losses ahead of Tuesday’s monthly U.S. CPI report.
Monday’s comments from Fed Governor Bowman were hawkish for Fed policy and bullish for the dollar when she said, "we are still far from achieving price stability, and I expect that it will be necessary to further tighten monetary policy to bring inflation down toward our goal."
EUR/USD (^EURUSD) on Monday rose by +0.38%. The euro Monday recovered from a 1-month low against the dollar and posted moderate gains after the European Union Commission raised its Eurozone 2023 GDP forecast and lowered its 2023 Eurozone inflation forecast. Also, Monday’s upbeat comments from ECB Vice President Guindos gave EUR/USD a boost when he said the ECB and the European Commission are "a bit more positive" on the Eurozone economic outlook.
ECB Governing Council member Centeno said inflation is coming down faster than expected, but the ECB "really needs to see inflation converging to 2% in the medium term" to moderate the pace of interest rate increases.
The European Union Commission raised its Eurozone 2023 GDP forecast to 0.9% from a prior estimate of 0.3% and cut its 2023 inflation forecast to 5.6% from a previous forecast of 6.1%.
USD/JPY (^USDJPY) on Monday rose by +0.80%. The yen Monday tumbled to a 5-week low against the dollar. The yen was under pressure Monday on speculation that the appointment of former BOJ member Ueda to be BOJ Governor will not affect BOJ policy when Ueda said, “the BOJ’s current policy is appropriate and monetary easing needs to be continued at this point.”
April gold (GCJ3) on Monday closed down -11.00 (-0.59%), and March silver (SIH23) closed down -0.223 (-1.01%). Precious metals Monday retreated, with gold falling to a 5-week low and silver dropping to a 2-1/2 month low. Long liquidation weighed on precious metals Monday ahead of Tuesday’s U.S. monthly report on consumer prices. Also, hawkish comments Monday from Fed Governor Bowman weighed on metals prices when she said she supported additional Fed rate hikes. In addition, gold prices are under pressure due to the continued liquidation of gold holdings in ETFs after holdings of gold in ETFs fell to a 2-3/4 year low Friday. A weaker dollar Monday limited the downside in metals prices.
More Forex News from Barchart
- Stocks Push Higher on U.S Inflation Optimism
- Dollar Climbs With T-Note Yields
- Stocks Mixed on Weakness in Tech as Bond Yields Climb
- Dollar Slips after Weekly U.S. Jobless Claims Rise More than Expected
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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