The dollar index (DXY00) on Monday fell by -0.18%.  The dollar index Monday fell moderately. Strength in EUR/USD weighed on the dollar after hawkish ECB comments pushed the euro up to a 1-1/2 week high against the dollar. Also, a rally in stocks Monday reduced the liquidity demand for the dollar.
Monday’s U.S. economic news was hawkish for Fed policy and bullish for the dollar after Jan factory orders fell -1.6% m/m, stronger than expectations of -1.8% m/m. Also, Jan factory orders ex-transportation rose +1.3% m/m, stronger than expectations of +1.0% m/m.
EUR/USD (^EURUSD) on Monday rose by +0.36%.  The euro Monday climbed to a 1-1/2 week high on hawkish ECB comments. ECB Chief Economist Lane boosted the euro when he said the ECB would probably need to raise interest rates again after raising them by 50 bp at next week’s meeting.  Also, ECB Governing Council member Holzmann said the ECB should raise interest rates by 50 bp in March, May, June, and July.Â
Monday’s Eurozone economic news was bearish for the euro.  Eurozone Jan retail sales rose +0.3% m/m, weaker than expectations of +0.6% m/m. Also, the Mar Sentix investor confidence index unexpectedly fell -3.1 to -11.1, weaker than expectations of -5.5.
Hawkish ECB comments Monday were supportive of EUR/USD. ECB Governing Council member Holzmann said that "core inflation will not weaken significantly in the first half of this year," therefore, the ECB should raise interest rates by 50 bp in March, May, June, and July. He added, "even if the ECB raises rates three times by 50 bp, we are only at a deposit rate of 4%.  Only there would we roughly get into the restrictive area."
USD/JPY (^USDJPY) on Monday rose by +0.10%. The yen Monday posted modest losses. A rebound in T-note yields Monday weighed on the yen. Also, Monday’s rally in the Nikkei Stock Index to a 3-month high reduced safe-haven demand for the yen. In addition, the action by the BOJ to restrict the use of its securities-lending facility suggests that it does not plan to widen its 10-year yield range or scrap yield curve control at this week’s policy meeting.Â
April gold (GCJ3) on Monday was unchanged, and May silver (SIK23) closed down -0.103 (-0.48%). Precious metals Monday closed steady to lower. A rebound in T-note yields Monday weighed on metals prices. Also, strength in stocks Monday curbed the safe-haven demand for precious metals. Silver prices were undercut on Chinese industrial metals demand concerns after Chinese leaders at the annual National People’s Congress set a lower-than-expected 5% GDP target for China this year, which implies China is unlikely to add large-scale stimulus.  A weaker dollar Monday was supportive of metals prices.
More Precious Metal News from Barchart
- Stocks Rise on Strength in Apple and Lower Bond Yields
- Dollar Follows T-Note Yields Lower
- Stocks Move Higher as Bond Yields Fall on Interest Rate Optimism
- Dollar Climbs With T-Note Yields
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.
