The dollar index (DXY00) on Wednesday rose by +0.66% and posted a 1-1/4 month high on better-than-expected U.S. economic reports. Also, a jump in T-note yields Wednesday was a bullish factor for the dollar.
Wednesday’s U.S. economic news was bullish for the dollar. Jan retail sales rose +3.0% m/m, stronger than expectations of +2.0% m/m and the biggest increase in 1-3/4 years. Also, Jan manufacturing production rose +1.0% m/m, stronger than expectations of +0.8% m/m and the biggest increase in 11 months. In addition, the Feb NAHB housing market index rose +7 to a 5-month high of 42, stronger than expectations of 37. Finally, the Feb Empire manufacturing survey general business conditions rose +27.1 to -5.8, stronger than expectations of -18.0.
EUR/USD (^EURUSD) on Wednesday fell by -0.53%. The euro Wednesday posted moderate losses but remained just above Monday’s 5-week low. Strength in the dollar Wednesday sparked long liquidation in the euro. EUR/USD was also under pressure after Wednesday’s economic news showed Eurozone Dec industrial production fell more than expected.
Wednesday’s Eurozone economic news was bearish for EUR/USD. Eurozone Dec industrial production fell -1.1% m/m, weaker than expectations of -0.8% m/m.
USD/JPY (^USDJPY) on Wednesday rose by +0.75% as the yen fell to a 1-1/4 month low against the dollar. Higher T-note yields Wednesday weighed on the yen. Central bank divergence is also pressuring the yen, with the Fed, ECB, and BOE all raising interest rates while the BOJ maintains QE and record-low interest rates. In addition, speculation that the appointment of former BOJ member Ueda to BOJ Governor will not affect BOJ policy is bearish for the yen.
Wednesday’s Japanese economic news was bearish for the yen after the Dec tertiary industry index unexpectedly fell -0.4% m/m, weaker than expectations of +0.1% m/m and the biggest decline in 5 months.
April gold (GCJ3) on Wednesday closed down -20.10 (-1.08%), and March silver (SIH23) closed down -0.301 (-1.38%). Precious metals Wednesday posted moderate losses, with gold falling to a 1-1/2 month low and silver dropping to a 2-1/2 month low. Wednesday’s rally in the dollar index to a 1-1/4 month high was bearish for metals prices. Also, higher global bond yields Wednesday undercut metals prices. Precious metals prices were also undercut after Wednesday’s stronger-than-expected U.S. economic news raised expectations of additional Fed rate hikes. Finally, gold prices were under pressure due to the continued liquidation of gold holdings in ETFs after holdings of gold in ETFs fell to a new 2-3/4 year low Tuesday.
More Precious Metal News from Barchart
- Stocks Under Pressure as U.S. Economic Strength May Spur More Rate Hikes
- Dollar Ticks Lower on Strength in the British Pound and Euro
- Stocks Retreat as Elevated U.S. CPI Keeps Hawkish Fed in Play
- Dollar Fades on Lower T-note Yields and Stronger Stocks
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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