The dollar index (DXY00) on Tuesday rose by +0.29%. The dollar Tuesday posted moderate gains and is just below last Friday’s 6-week high. A jump in the 10-year T-note yield Tuesday to a 3-1/4 month high was bullish for the dollar. Also, Tuesday’s slump in stocks boosted the liquidity demand for the dollar.
Tuesday’s U.S. economic news was mixed for the dollar. On the positive side, the Feb S&P manufacturing PMI rose +0.9 to a 4-month high of 47.8, stronger than expectations of 47.2. Conversely, Jan existing home sales unexpectedly fell -0.7% m/m to a 12-year low of 4.00 million, weaker than expectations of an increase to 4.10 million.
EUR/USD (^EURUSD) on Tuesday fell by -0.37%. The euro Tuesday moved moderately lower and is just above last Friday’s 6-week low. Strength in the dollar Tuesday weighed on the euro. Also, EUR/USD was under pressure after Tuesday’s economic news showed the Eurozone Feb S&P manufacturing PMI unexpectedly declined. In addition, the euro is being undercut after Bank of America and JPMorgan Chase predicted an end to this year’s rally in European stocks.
Tuesday’s European economic news was mixed for the euro. On the bearish side, the Feb S&P Eurozone manufacturing PMI unexpectedly fell -0.3 to 48.5, weaker than expectations of an increase to 49.3. However, the S&P Eurozone Feb composite PMI rose +2.0 to a 9-month high of 52.3, stronger than expectations of 50.7. Also, the German Feb ZEW expectations of economic growth index rose +11.2 to a 1-year high of 28.1, stronger than expectations of 23.0.
USD/JPY (^USDJPY) on Tuesday rose by +0.48%. The yen Tuesday dropped to a 2-month low against the dollar. Higher T-note yields Tuesday weighed on the yen. Also, central bank divergence is pressuring the yen, with the Fed, ECB, and BOE raising interest rates while the BOJ maintains QE and record-low interest rates.
Tuesday’s Japanese economic news was mixed for the yen. On the bearish side, the Japan Feb Jibun Bank manufacturing PMI fell -1.5 to 47.4, the steepest pace of contraction in 2-1/2 years. However, the Feb Jibun Bank services PMI rose +1.3 to an 8-month high of 53.6.
April gold (GCJ3) on Tuesday closed down -7.70 (-0.42%), and March silver (SIH23) closed up +0.175 (+0.81%). Precious metals Tuesday settled mixed. A stronger dollar Tuesday and higher global bond yields weighed on metals prices. Also, 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 Monday. By contrast, silver prices moved higher after the Feb S&P U.S. manufacturing PMI increased more than expected to a 4-month high, a sign of stronger industrial metals demand.
More Precious Metal News from Barchart
- Stocks Fall on Concern about Hawkish Fed
- Dollar Little Changed as T-Note Yields Fall
- Central Bank Comments on Tighter Monetary Policy Weighs on Stocks
- Dollar Erases Early Gains as Stocks Stabilize
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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