The dollar index (DXY00) Tuesday rose by +0.42% and posted a 3-week high. The dollar Tuesday garnered support from higher T-note yields. Also, weakness in the yen gave the dollar a boost after the yen Tuesday dropped to a 3-week low against the dollar. In addition, a slide in stocks boosted liquidity demand for the dollar.
Tuesday’s U.S. economic news was bearish for the dollar. The Jul ISM manufacturing index rose +0.4 to 46.4, weaker than expectations of 46.9. Also, the Jun JOLTS job openings fell -34,000 to a 2-year low of 9.582 million, showing a weaker labor market than expectations of 9.600 million. In addition, Jun construction spending rose +0.5% m/m, weaker than expectations of +0.6% m/m.
Hawkish comments Tuesday from Chicago Fed President Goolsbee were supportive for the dollar when he said that while recent data gave him hope that inflation can cool without too much economic pain, he wants to see more of trend develop of lower prices before the Fed stops raising interest rates.
EUR/USD (^EURUSD) Tuesday fell by -0.18%. Strength in the dollar Tuesday undercut the euro. Losses in EUR/USD were limited on signs of economic strength in Europe after the Eurozone Jun unemployment rate remained at a record low and the German July unemployment rate unexpectedly declined.
The Eurozone Jun unemployment rate was unchanged at a record low 6.4%, showing a stronger labor market than expectations of an increase to 6.5%.
The German Jul unemployment change unexpectedly fell by -4,000, showing a stronger labor market than expectations of an increase of +20,000. The Jul unemployment rate unexpectedly fell -0.1 to 5.6%, showing a stronger labor market than expectations of no change at 5.7%.
USD/JPY (^USDJPY) on Tuesday rose by +0.77%. The yen Tuesday fell for the third consecutive session and posted a 3-week low against the dollar. The yen remains under pressure from Monday when the BOJ announced an unscheduled bond-purchase operation in an attempt to keep 10-year JGB bond yields from climbing. Also, higher T-note yields Tuesday weighed on the yen.
Tuesday’s Japanese economic news was bullish for the yen. The Jun jobless rate unexpectedly fell -0.1 to 2.5%, showing a stronger labor market than expectations of no change at 2.6%. Also, the Jul Jibun Bank manufacturing PMI was revised upward by +0.2 to 49.6 from the initially reported 49.4.
October gold (GCV3) Tuesday closed down -30.1 (-1.53%), and Sep silver (SIU23) closed down -0.646 (-2.59%). Precious metals prices on Tuesday sold off, with gold falling to a 2-1/2 week low. Tuesday’s rally in the dollar index to a 3-week high undercut metals prices. Also, higher global bond yields Tuesday were bearish for metals. In addition, gold prices are under pressure from fund liquidation after long gold holdings in ETFs fell to a new 3-year low on Monday. Silver prices were weighed down further by Tuesday’s weaker-than-expected manufacturing reports from China and the U.S., which signals reduced industrial metals demand.
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.
