Dollar Ends Slightly Higher on Better Than Expected U.S. June Factory Orders Report

The dollar index (DXY00) on Tuesday rose +0.015 (+0.02%).  EUR/USD (^EURUSD) fell -0.0003 (-0.03%).  USD/JPY (^USDJPY) fell -0.23 (-0.21%).  The dollar index on Tuesday was slightly higher on stronger-than-expected U.S. June factory orders report.  Gains were limited as a rally in stocks curbed the liquidity demand for the dollar.

EUR/USD (^EURUSD) on Tuesday fell slightly as weakness in German bund yields weighed on the euro.  The 10-year German bund yield Tuesday fell to a 6-month low of -0.492%.  Losses in EUR/USD were contained by the acceleration of the Eurozone June PPI to a 38-year high of +10.2% y/y.  USD/JPY (^USDJPY) on Tuesday posted moderate losses and dropped to a 2-month low.

Tuesday’s U.S. economic data was better than expected and bullish for the dollar.  U.S. June factory orders rose +1.5% m/m, stronger than expectations of +1.0% m/m.

August gold (GCQ21) on Tuesday closed down -8.00 (-0.44%), and Sep silver (SIU21) closed up +0.007 (+0.03%).  A stronger dollar on Tuesday weighed on metal prices.  Gold also fell back after a rally in stocks curbed the safe-haven demand for gold.  Silver prices garnered support from the better-than-expected U.S. June factory orders report, a sign of strength in industrial metals demand. 

The dollar and gold still have safe-haven support from concern the worldwide spread of the delta Covid variant will crimp the global economic recovery.  The 7-day average of new U.S. Covid infections rose to a 5-1/2 month high Monday of 85,552.  Also, Japan on Friday extended a state of emergency to areas surrounding Tokyo until the end of August.   In addition, the positive Covid infection rate in the UK rose to 1.57 on Friday, the highest in 6 months.