The dollar index (DXY00) Wednesday fell by -0.06% as a decline in T-note yields weighed on the dollar. Also, the U.S. 10-year breakeven inflation rate fell to a 2-week low on Wednesday, which is dovish for Fed policy and negative for the dollar. Losses in the dollar were limited as weakness in stocks boosted liquidity demand for the dollar.
EUR/USD (^EURUSD) Wednesday rose by +0.19%. The euro found support on Wednesday from a weaker dollar. Also, higher European government bond yields Wednesday strengthened the euro’s interest rate differentials and supported EUR/USD.
USD/JPY (^USDJPY) on Wednesday rose by +0.22%. The yen Wednesday gave up early gains and moved moderately lower. A decline in the 10-year Japan JGB bond yield Wednesday to a 1-1/2 week low weighed on the yen. Lower T-note yields Wednesday limited losses in the yen, as did a -0.53% drop in the Nikkei Stock Index, which boosted some safe-haven demand for the yen.
Wednesday’s Japanese economic news was bearish for the yen after Jul machine tool orders fell -19.8% y/y, the seventh consecutive monthly decline.
October gold (GCV3) Wednesday closed down -9.0 (-0.46%), and Sep silver (SIU23) closed down -0.076 (-0.33%). Precious metals prices on Wednesday closed moderately lower, with silver sliding to a 5-week low. Gold prices were under pressure after U.S. inflation expectations declined as the 10-year breakeven inflation rate fell to a 2-week low, curbing demand for gold as an inflation hedge. Also, fund liquidation in gold continues after long gold holdings in ETFs fell to a 3-1/3 year low Tuesday. Silver prices are also under pressure on concerns that weakness in China’s economy will curb industrial metals demand after China's Jul CPI fell -0.3% y/y, the biggest decline in 2-1/2 years. A weaker dollar Wednesday and lower T-note yields limited losses in precious metals.
More Forex News from Barchart
- Stocks Slip on Weakness in Chip Stocks
- Dollar Gains on a Slide in Stocks and Weakness in the Yuan
- Stocks Fall on Regional Bank Jitters
- Dollar Slightly Higher on Hawkish Fed Comments
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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