The dollar index (DXY00) on Tuesday fell by -0.03% and posted a 5-week low. An easing of U.S.-European banking turmoil has reduced liquidity demand for the dollar. On Monday, the BOE and BOJ received zero bids to secure dollars via the Fed’s new swap line, while the ECB allotted just $5 million to a single bidder. The dollar is also under pressure on speculation that the Fed may adopt a less hawkish tone during the Tue/Wed FOMC meeting. However, the dollar recovered most of its losses on higher T-note yields and a stronger-than-expected U.S. Feb existing home sales report.
Tuesday’s U.S. economic news was supportive for the dollar after Feb existing home sales jumped +14.5% m/m to a 5-month high of 4.58 million, stronger than expectations of 4.20 million.
EUR/USD (^EURUSD) on Tuesday rose by +0.42% and posted a 5-week high. A weaker dollar Tuesday supported moderate gains in the euro. EUR/USD Tuesday also moved higher on hawkish ECB comments from ECB Governing Council member Kazaks who said the ECB was not yet finished raising interest rates.
Tuesday’s Eurozone economic news was mixed for the euro. On the positive side, Eurozone Feb new car registrations rose +11.5% y/y to 803,000 units, the seventh consecutive monthly increase. Also, Eurozone Jan construction output rose +3.9% m/m, the largest increase in 1-3/4 years. Conversely, the German Mar ZEW expectations of economic growth index fell -15.1 to 13.0, weaker than expectations of 15.0.
USD/JPY (^USDJPY) on Tuesday rose by +0.85%. Higher T-note yields Tuesday weighed on the yen. Also, an easing of the U.S. and European banking turmoil has reduced the safe-haven demand for the yen. Trading activity in the yen Tuesday was subdued, with Japanese markets closed for the Vernal Equinox Day holiday.
April gold (GCJ3) on Tuesday closed down -41.70 (-2.10%), and May silver (SIK23) closed down -0.221 (-0.98%). Precious metals Tuesday retreated and closed moderately lower as an easing of the U.S.-European banking turmoil sparked a rally in stocks and curbed the safe-haven demand for precious metals. Also, higher global bond yields Tuesday weighed on metals prices. Metals extended their losses Tuesday after the dollar index rebounded from a 5-week low and was little changed.
More Precious Metal News from Barchart
- Stocks Higher as Banking Turmoil Eases
- Dollar Retreats on Reduced Liquidity Demand
- Rebound in Bank Stocks Lifts Broad Market
- Dollar Dragged Lower by Decline in 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.
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