The dollar index (DXY00) on Monday fell by -0.02%. Lower T-note yields Monday weighed on the dollar. Also, a rally in stocks curbed liquidity demand for the dollar. Losses in the dollar were limited by weakness in the yen, which fell to a 9-1/2 month against the dollar on dovish comments from BOJ Governor Ueda.
U.S. economic news Monday was supportive of the dollar. The Aug Dallas Fed manufacturing outlook level of general business activity rose +2.8 to a 5-month high of -17.2, stronger than expectations of -19.0.
EUR/USD (^EURUSD) on Monday rose by +0.15%. The euro Monday rose moderately on signs of reduced liquidity in the Eurozone after Eurozone July M3 money supply unexpectedly contracted by the most in 13 years. Also, hawkish comments today from ECB Governing Council member Holzmann boosted bund yields and the euro when he said he sees the case for pushing on with ECB interest rate increases without taking a pause.
Eurozone July M3 money supply unexpectedly fell -0.4% y/y, weaker than expectations of no change and the steepest pace of contraction in 13 years.
ECB Governing Council member Holzmann said, "We're not yet in the clear when it comes to inflation, and if there aren't any big surprises, I see a case for pushing on with rate increases without taking a pause."
USD/JPY (^USDJPY) on Monday rose by +0.05%. The yen on Monday fell to a new 9-1/2 month low against the dollar on last Friday’s dovish comments from BOJ Governor Ueda, who said that price growth remains slower than the BOJ’s goals, signaling the BOJ will maintain its ultra-easy monetary policies. The yen recovered most of its losses Monday after T-note yields declined.
October gold (GCV3) Monday closed up +6.6 (+0.34%), and Sep silver (SIU23) closed up +0.018 (+0.07%). Precious metals prices Monday closed slightly higher. Lower global bond yields Monday were bullish for precious metals. Also, precious metals on Monday had carryover support from last Friday’s dovish central bank comments. Fed Chair Powell left open the possibility of a Fed rate hike pause when he said the Fed "will proceed carefully" on whether to hike again. Also, BOJ Governor Ueda signaled the BOJ would maintain its ultra-easy monetary policies when he said that price growth remains slower than the BOJ’s goals. Gains in gold prices were contained on continued liquidation of gold holdings by funds after long gold holdings in ETFs fell to a 3-1/3 year low last Friday.
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.
