The dollar index (DXY00) Tuesday rose by +0.48%. A slump in stocks Tuesday boosted liquidity demand for the dollar and pushed the dollar index higher. Also, weakness in the yuan was supportive for the dollar after weaker-than-expected Chinese trade news Tuesday knocked the yuan down to a 2-1/2 week low against the dollar.
Dovish Fed comments Tuesday from Philadelphia Fed President Harker were bearish for the dollar when he said, "Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold interest rates steady and let the monetary policy actions we have taken do their work."
EUR/USD (^EURUSD) Tuesday fell by -0.39% on strength in the dollar. Also, a decline in the ECB’s June inflation expectations survey was dovish for ECB policy and negative for the euro.
The ECB's Jun inflation expectations survey eased to 3.4% over the next year versus May's 3.9%. For the next three years, inflation expectations eased to 2.3% in Jun from 2.5% in May.
USD/JPY (^USDJPY) on Tuesday rose by +0.62%. The yen Tuesday retreated on the weight of a strong dollar. Also, weaker-than-expected Japanese consumer earning and spending reports were dovish for BOJ policy and bearish for the yen. In addition, the Nikkei Stock Index closed higher Tuesday, reducing the safe-haven demand for the yen.
Japan Jun labor cash earnings rose +2.3% y/y, weaker than expectations of +3.0% y/y. Also, Jun real cash earnings fell -1.6% y/y, weaker than expectations of -0.9% y/y.
Japan Jun household spending fell -4.2% y/y, weaker than expectations of -3.8% y/y and the biggest decline in 2 years.
The Japan Jul eco watchers outlook unexpectedly rose +1.3 to 54.1, stronger than expectations of a decline to 52.7.
October gold (GCV3) Tuesday closed down -10.0 (-0.51%), and Sep silver (SIU23) closed down -0.425 (-1.83%). Precious metals prices on Tuesday posted moderate losses, with silver falling to a 5-week low. A stronger dollar Tuesday weighed on metals prices. Also, Tuesday’s weaker-than-expected Chinese trade news showed weakness in China’s economy that is negative for industrial metals demand. In addition, fund liquidation in gold continues after long gold holdings in ETFs fell to a 3-1/3 year low on Monday. Losses in precious metals were limited by lower global bond yield and a slump in stocks, which boosted some safe-haven demand for precious metals.
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.
