The dollar index (DXY00) on Monday rose by +0.48%. The dollar Monday moved moderately higher on carryover support from last Friday’s stronger-than-expected U.S. March payroll report, which bolstered the outlook for the Fed to keep raising interest rates. Also, a slump in stocks on Monday boosted the liquidity demand for the dollar. In addition, higher T-note yields on Monday strengthened the dollar’s interest rate differentials and supported the dollar.
Last Friday’s monthly U.S. payroll report was bullish for the dollar. U.S. March nonfarm payrolls rose +236,000, stronger than expectations of +230,000. Also, the March unemployment rate unexpectedly fell -0.1 to 3.5%, showing a stronger labor market than expectations of no change at 3.6%.
EUR/USD (^EURUSD) on Monday fell by -0.40%. Dollar strength Monday weighed on the euro. Trading activity Monday in EUR/USD was muted, with European markets closed for the Easter Monday holiday. Losses in the euro were limited by hawkish comments from ECB Governing Council member Knot last Friday, who said, "We are certainly not done with interest rate hikes.” He also said, “Core inflation in the Eurozone is now almost 6%, and you can't fight that with an interest rate of 3%.”
USD/JPY (^USDJPY) on Monday rose by +1.07%. The yen Monday dropped to a 3-1/2 week low against the dollar. The yen was under pressure Monday on comments from BOJ Governor Ueda, who said it is “appropriate” for the BOJ to continue with its yield-curve control framework, which signals no shift in the central bank’s ultra-easy monetary policies. Higher T-note yields Monday also weighed on the yen.
Monday’s Japanese economic news was bullish for the yen. Japan’s March consumer confidence index rose +2.6 to a 13-month high of 33.9, stronger than expectations of 31.5. Also, the March eco watchers outlook survey rose +3.1 to a 16-month high of 54.1, stronger than expectations of 50.9.
June gold (GCM3) on Monday closed down -22.60 (-1.12%), and May silver (SIK23) closed down -0.181 (-0.72%). Precious metals Monday posted moderate losses. A stronger dollar and higher T-note yields Monday undercut metals prices. Also, metals have some negative carryover from last Friday’s stronger-than-expected U.S. March payroll report that bolstered expectations for the Fed to keep raising interest rates. On the positive side for gold is continued strong demand from fund buying as gold holdings in exchange-traded funds (ETFs) rose to a 10-week high last Friday. Also, the weakness in stocks on Monday sparked some safe-haven demand for precious metals.
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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.
