The dollar index (DXY00) on Wednesday rose by +0.23%. The dollar posted moderate gains Wednesday as waning concerns of banking-sector contagion weakened the yen. The dollar also found support after Wednesday’s economic news showed U.S. Feb pending home sales rose unexpectedly. Gains in the dollar were limited as a rally in stocks curbed liquidity demand for the dollar.
Wednesday’s U.S. economic data was bullish for the dollar after Feb pending home sales unexpectedly rose +0.8% m/m, stronger than expectations of a -3.0% m/m decline.
EUR/USD (^EURUSD) on Wednesday fell by -0.01%. The euro Wednesday was little changed. A stronger dollar Wednesday weighed on the euro. However, losses in EUR/USD were limited due to some hawkish ECB comments and a larger-than-expected increase in German Apr GfK consumer confidence.
ECB Chief Economist Lane said the ECB will need to increase interest rates further if recent tensions in the financial system stay "fairly limited."
ECB Governing Council member Kazimir said the ECB should continue with interest-rate increases despite the turbulence around the financial industry, though the pace of hikes may need to slow.
The German Apr GfK consumer confidence index rose +1.1 to a 9-month high of -29.5, stronger than expectations of -30.0.
USD/JPY (^USDJPY) on Wednesday rose by +1.38%. The yen fell sharply Wednesday as easing of the U.S.-European banking turmoil has curbed the safe-haven demand for the yen. Also, Wednesday’s rally in the Nikkei Stock Index to a 2-week high reduced safe-haven demand for the yen. In addition, Wednesday’s comments from BOJ Governor Kuroda undercut the yen when he said it is “appropriate” for the BOJ to continue with monetary easing as the benefits of easing exceed its costs.
April gold (GCJ3) on Wednesday closed down -6.60 (-0.33%), and May silver (SIK23) closed up +0.046 (+0.20%). Precious metals on Wednesday settled mixed. A stronger dollar on Wednesday weighed on metals prices. Also, a rally in stocks curbed the safe-haven demand for precious metals. However, silver prices recovered from early losses and rose after U.S. Feb pending home sales unexpectedly increased, a positive factor for industrial metals demand. Losses in gold were limited as the recent banking turmoil has sparked fund buying of gold as gold holdings in exchange-traded funds (ETFs) rose to an 8-week high Tuesday.
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.
