The dollar index (DXY00) on Wednesday rose slightly by +0.06% but remained below Tuesday’s 1-1/4 month high. Higher T-note yields supported the dollar after the 10-year T-note yield Wednesday climbed to an 8-week high of 3.124%.
Also, Wednesday’s U.S. economic news was bullish for the dollar. July capital goods new orders nondefense ex-aircraft, a proxy for capital spending, rose +0.4% m/m, slightly stronger than expectations of +0.3% m/m. Also, July pending home sales fell -1.0% m/m, which was a smaller decline than expectations of -2.6% m/m.
EUR/USD (^EURUSD) on Wednesday fell by -0.01%. EUR/USD Wednesday was little changed as the euro consolidated just above Tuesday’s 20-year low. The upside in the euro was limited Wednesday by concern that the ongoing energy crisis in Europe will throw the Eurozone economy into recession. European nat-gas prices on Wednesday rose more than +8% to a 5-1/2 month high. Losses in EUR/USD were contained after the 10-year German bund yield rose to a 7-week high Wednesday of 1.388%, strengthening the euro’s interest rate differentials.
USD/JPY (^USDJPY) on Wednesday rose by +0.20%. The yen fell moderately Wednesday, weighed down by the climb in the 10-year T-note yield to an 8-week high. Also, divergent central bank policies weighed on the yen, with the Fed continuing its rate-hike cycle while the BOJ maintains QE and record low-interest rates.
October gold (GCV22) Wednesday closed up +0.50 (+0.03%), and September silver (SIU22) closed down -0.119 (-0.63%). Gold and silver prices Wednesday settled mixed. Gold found support on increased demand as an inflation hedge as the 10-year breakeven inflation expectations rate Wednesday climbed to a 2-month high of 2.630%. Silver prices fell Wednesday, and gains in gold were limited, by a stronger dollar. Gold prices were also under pressure Wednesday from higher global bond yields. Gold prices were undercut by continued long liquidation pressure after long gold positions in ETFs fell to a 6-month low Tuesday.
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