The dollar index (DXY00) on Tuesday gave up most of an early advance and rose by only +0.01%. An easing of contagions concerns from the U.S. banking turmoil sparked a rally in stocks that curbed the liquidity demand for the dollar. Higher T-note yields Tuesday limited losses in the dollar.
Tuesday’s U.S. consumer price news was close to expectations and neutral for the dollar after Feb CPI rose +0.4% m/m and +6.0% y/y, right on expectations with the +6.0% y/y gain, the smallest year-on-year increase in 17 months. Also, Feb CPI ex-food and energy eased to +5.5% y/y from +5.6% y/y in Jan, right on expectations and the slowest pace of increase in 14 months.
EUR/USD (^EURUSD) on Tuesday rose by +0.05% and posted a 1-month high.  The euro Tuesday recovered from early losses and moved slightly higher after the dollar index gave up most of an early advance. EUR/USD also has support on expectations for the ECB to raise interest rates by +50 bp at Thursday’s policy meeting.
Tuesday’s Eurozone economic news was bearish for EUR/USD after Italy Jan industrial production fell -0.7% m/m, weaker than expectations of -0.4% m/m.
USD/JPY (^USDJPY) on Tuesday rose by +0.63%. The yen Tuesday was under pressure from a sharp decline in Japanese government bond yields after the 10-year JGB bond yield fell to a 6-3/4 month low of 0.177%. Also, higher T-note yields Tuesday weighed on the yen.Â
April gold (GCJ3) on Tuesday closed down -5.60 (-0.29%), and May silver (SIK23) closed up +0.117 (+0.53%). Precious metals Tuesday settled mixed, with silver climbing to a 2-1/2 week high. An easing of contagion risk from the U.S. banking crisis pushed stocks and bond yields higher Tuesday and weighed on precious metal prices. Also, Tuesday’s as-expected U.S. Feb CPI report has reduced the demand for gold as an inflation hedge.Â
More Forex News from Barchart
- Stocks Jump as Bank Stocks Rebound and U.S. Consumer Prices Ease
- Rates & Commodities
- Dollar Falls Back on Reduced Rate Hike Expectations
- Stocks Higher as a Plunge in Bond Yields Supports the Broader Market
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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