The dollar index (DXY00) on Tuesday rose by +0.20%.  The dollar index Tuesday recovered from early losses and posted moderate gains as stock market weakness boosted liquidity demand for the dollar.  Also, month-end position squaring and short-covering gave the dollar a boost. The dollar Tuesday was initially under pressure from weaker-than-expected U.S. economic news. Â
Tuesday’s U.S. economic news was mostly weaker-than-expected and bearish for the dollar. The Feb MNI Chicago PMI unexpectedly fell -0.7 to 43.6, weaker than expectations of an increase to 45.5. Also, the Conference Board U.S. Feb consumer confidence index unexpectedly fell -3.1 to 102.9, weaker than expectations of a rise to 108.5. In addition, the Feb Richmond Fed manufacturing survey unexpectedly fell -5 to a 2-3/4 year low of -16, weaker than expectations of an increase to -5.
EUR/USD (^EURUSD) on Tuesday fell by -0.25%.  The euro Tuesday gave up an early advance and posted moderate losses after ECB Governing Council member Vujcic said Eurozone price growth appears to be "quite persistent," and it will "take time" for officials to bring it down. EUR/USD Tuesday initially moved higher after an unexpected acceleration in French, and Spanish consumer prices pushed the 10-year German bund yield up to an 11-year high of 2.712%.
The German Jan import price index eased to 6.6% y/y from 12.6% y/y in Dec, the slowest pace of increase in nearly two years.
France's Feb CPI (EU harmonized) unexpectedly rose +0.2 to a record high 7.2% y/y, stronger than expectations of no change at 7.0%.
Span Feb CPI (EU harmonized)Â unexpectedly rose +0.2 to 6.1% y/y, stronger than expectations of a decline to 5.7% y/y.
USD/JPY (^USDJPY) on Tuesday fell by -0.03%. The yen Tuesday rebounded from a 2-1/4 month low against the dollar and rose slightly. A retreat in T-note yields Tuesday sparked some short covering in the yen. The yen Tuesday initially fell after the 10-year T-note yield climbed to a 3-1/2 month high. However, T-note yields fell back from early highs and turned lower, which was bullish for the yen.
Tuesday’s Japanese economic news was mixed for the yen. On the positive side, Jan retail sales rose +1.9% m/m, stronger than expectations of +0.4% m/m and the largest increase in 2-1/2 years. Conversely, Jan industrial production fell -4.6% m/m, weaker than expectations of -2.9% m/m and the biggest decline in 8 months.
April gold (GCJ3) on Tuesday closed up +11.80 (+0.65%), and March silver (SIH23) closed up +0.291 (+1.41%). Precious metals Tuesday posted moderate gains. A decline in T-note yields Tuesday was supportive of metals prices.  Also, signs of persistent inflation in Europe boosted demand for gold as an inflation hedge after Jan consumer prices in France and Spain unexpectedly accelerated. A bearish factor for gold prices is the continued liquidation of gold holdings in ETFs after gold holdings fell to a new 2-3/4 year low last Friday.
More Precious Metal News from Barchart
- Stocks Mixed on Weak U.S. Economic News and Higher Global Bond Yields
- Dollar Slides Amid Lower Bond Yields and Stronger Stocks
- Stocks Climb on Increased M&A Activity and Lower Bond Yields
- Dollar Rallies as U.S. Economic Strength Keeps Fed Hawkish
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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