The dollar index (DXY00) Thursday rallied to a 1-week high and rose by +0.57%. A jump in bond yields Thursday supported the dollar. Also, signs of strength in the U.S. labor market are hawkish for Fed policy and bullish for the dollar after weekly initial unemployment claims unexpectedly fell to a 2-month low. In addition, the slump in stocks Thursday boosted the liquidity demand for the dollar.
U.S. weekly initial unemployment claims unexpectedly fell -9,000 to a 2-month low of 228,000, showing a stronger labor market than expectations of an increase to 240,000.
The U.S. Jul Philadelphia Fed business outlook survey rose +0.2 to -13.5, weaker than expectations of -10.0.
U.S. Jun existing home sales fell -3.3% m/m to a 5-month low of 4.16 million, weaker than expectations of 4.20 million.
U.S. Jun leading indicators fell -0.7% m/m, weaker than expectations of -0.6% m/m.
EUR/USD (^EURUSD) Thursday fell by -0.63% and posted a 1-week low. A stronger dollar Thursday sparked long liquidation in the euro. Also, an easing of price pressures in Germany is dovish for ECB policy and negative for the euro after Thursday’s news showed German June PPI rose at the smallest pace in 2-1/2 years.
The Eurozone July consumer confidence indicator rose +1.0 to a 17-month high of -15.1, stronger than expectations of -15.8.
German June PPI eased to +0.1% y/y from+1.0% y/y in May, the smallest pace of increase in 2-1/2 years.
USD/JPY (^USDJPY) on Thursday rose by +0.31%. The yen on Thursday tumbled to a 1-week low against the dollar and was under pressure from higher T-note yields. Also, Thursday’s weaker-than-expected Japan trade news for June is bearish for the yen. Losses in the yen were limited as a slide in global equity markets Thursday boosted the safe-haven demand for the yen. Also, an upward revision to Japan’s Jun machine tool orders was bullish for the yen.
Japan trade data was weaker than expected as Jun exports rose +1.5% y/y, weaker than expectations of +2.4% y/y. Also, June imports fell -12.9% y/y, weaker than expectations of -11.3% y/y and the largest decline in 2-3/4 years.
Japan June machine tool orders were revised upward by +0.6 to -21.1% y/y from the initially reported -21.7% y/y.
August gold (GCQ3) Thursday closed down -9.9 (-0.50%), and Sep silver (SIU23) closed down -0.425 (-1.67%). Precious metals prices Thursday gave up an early advance and closed moderately lower. Gold fell from a 1-1/2 month high, and silver dropped from a 2-1/4 month high and moved lower as a rally in the dollar Thursday to a 1-week high sparked long liquidation in precious metals. Also, higher global bond yields Thursday weighed on metals prices. In addition, the ongoing fund liquidation of gold is weighing on gold as holdings in gold ETFs fell to a 3-1/4 year low on Wednesday. Losses were limited as Thursday’s slide in global equity markets sparked 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.
