The dollar index (DXY00) Wednesday rose by +0.34%. Weakness in the British pound underpinned the dollar Wednesday as GBP/USD fell to a 1-week low on better-than-expected UK inflation news. Also, the weakness in the yen Wednesday was positive for the dollar. Wednesday’s weaker-than-expected U.S. housing starts report limited the dollar’s upside, along with a decline in T-note yields.
U.S. Jun housing starts fell -8.0% m/m to 1.434 million, weaker than expectations of 1.480 million. Jun building permits, a proxy for future construction, unexpectedly fell -3.7% m/m to 1.440 million, weaker than expectations of an increase to 1.500 million.
EUR/USD (^EURUSD) Wednesday fell by -0.23%. Dollar strength Wednesday weighed on the euro. Also, an early decline in the 10-year German bund yield to a 3-week low weakened the euro’s interest rate differentials. Losses in EUR/USD were limited after the Eurozone June core CPI was revised higher, a hawkish factor for ECB policy.
Eurozone May construction output rose +0.2% m/m, the first increase in 3 months.
Eurozone Jun new car registrations rose +17.8% y/y to 1.045 million, the eleventh consecutive monthly increase.
Eurozone Jun core CPI was revised slightly by +0.1 to 5.5% from 5.4%.
USD/JPY (^USDJPY) on Wednesday rose by +0.62%. The yen was under pressure Wednesday after BOJ Governor Ueda indicated there would be a continuation of the BOJ’s easy monetary policy until there is a shift in its assessment for achieving its inflation target. Also, a rally in the Nikkei Stock Index to a 1-1/2 week high Wednesday curbed safe-haven demand for the yen. Wednesday's decline in T-note yields was a supportive factor for the yen.
August gold (GCQ3) Wednesday was unchanged, and Sep silver (SIU23) closed up +0.131 (+0.52%). Precious metals prices Wednesday settled mixed, with silver posting a 2-1/4 month high. Lower global government bond yields Wednesday were a bullish factor for precious metals. Also, dovish comments from BOJ Governor Ueda gave precious metals a boost when he indicated it would take a shift in the BOJ’s assessment for achieving its inflation target to change its stance for persistent monetary easing. Gold prices relinquished their gains on a stronger dollar and a rally in the S&P 500 to a 15-month high, which curbed safe-haven demand for precious metals. Also, the ongoing fund liquidation of gold is weighing on gold prices as holdings in gold ETFs fell to a 4-month low on 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.
