The dollar index (DXY00) on Thursday tumbled to a 2-week low and finished down by -0.72%. The dollar retreated Thursday after U.S. weekly initial unemployment claims jumped to a 19-month high and knocked T-note yields lower. Also, expectations for the Fed to pause its rate hike campaign at next week’s FOMC meeting undercut the dollar. The market expects only a 28% chance that the Fed will raise the fed funds target range by 25 bp next week.
U.S. weekly initial unemployment claims rose +28,000 to a 19-month high of 261,000, showing a weaker labor market than expectations of 235,000.
EUR/USD (^EURUSD) on Thursday rallied to a 2-week high and finished up by +0.74%. Dollar weakness Thursday gave the euro a boost. Also, central bank divergence is boosting the euro on the prospects for the Fed to pause raising interest rates next week while the ECB continues to raise rates. EUR/USD rallied Thursday despite a downward revision to Eurozone Q1 GDP.
Eurozone Q1 GDP was revised downward to -0.1% q/q and +1.0% y/y from the previously reported unchanged q/q and +1.2% y/y.
USD/JPY (^USDJPY) on Thursday fell by -0.82%. The yen rallied Thursday after Japan’s Q1 GDP was revised higher. Also, signs of weakness in the U.S. labor market pushed T-note yields lower and boosted the yen after weekly U.S. jobless claims rose to a 19-month high. In addition, an increase in the 10-year JGB bond yield to a 1-1/2 week high Thursday of 0.445% strengthened the yen’s interest rate differentials.
August gold (GCQ3) on Thursday closed up +20.20 (+1.03%), and July silver (SIN23) closed up +0.819 (+3.48%). Precious metals Thursday moved higher, with silver up sharply at a 1-month high. A slump in the dollar index to a 2-week low Thursday was bullish for metals. Also, a decline in T-note yields Thursday was supportive of metals prices. In addition, metals are also climbing as Thursday’s weekly report showed a jump in U.S. jobless claims rose to a 19-month high and bolsters the case for the Fed to pause or even end its rate hike campaign.
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.
