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Dollar Rebounds as Stocks Falter

Barchart - Mon Jan 30, 2023

The dollar index (DXY00) on Monday rose by +0.33%.  The dollar Monday recovered from early losses and posted moderate gains. A slump in stocks Monday fueled liquidity demand for the dollar.  Also, higher T-note yields Monday strengthened the dollar’s interest rate differentials.  The dollar Monday initially moved lower on expectations for the Fed on Wednesday to slow its pace of rate hikes to 25 bp from 50 bp last month and 75 bp in November.

Monday’s U.S. economic news supported the dollar after the Jan Dallas Fed manufacturing outlook level of general business activity rose +11.6 to an 8-month high of -8.4, stronger than expectations of -15.0.

EUR/USD (^EURUSD) on Monday fell by -0.18%.   The euro Monday gave up an early advance and fell moderately after a rebound in the dollar sparked long liquidation in the euro.  Also, Monday’s economic news showed the German economy unexpectedly contracted last quarter, which was bearish for the euro.  EUR/USD on Monday initially moved higher as signs of faster price pressures in Europe pushed European government bond yields higher and supported the euro after Spain’s Jan CPI rose more than expected.

The Eurozone Jan economic confidence indicator rose +2.8 to 99.9, stronger than expectations of 97.0.

German Q4 GDP fell -0.2% q/q and rose +0.5% y/y, weaker than expectations of unch q/q and +0.8% y/y.

Spain's Jan CPI (EU harmonized) rose +5.8% y/y, stronger than expectations of +4.8% y/y.

USD/JPY (^USDJPY) on Monday rose by +0.45%.   The yen Monday was under pressure from higher T-note yields. Also, Monday’s comments from BOJ Governor Kuroda weighed on the yen when he told the Japanese parliament that the BOJ would maintain its 2% inflation target and continue monetary easing. 

February gold (GCG3) on Monday closed down -6.50 (-0.34%), and March silver (SIH23) closed up +0.111 (+0.47%).  Precious metals Monday settled mixed.  A stronger dollar Monday was bearish for metals prices.  Also, higher global bond yields Monday weighed on metals prices.  Losses in gold were limited, and silver gained on expectations for the Fed on Wednesday to slow its pace of interest rate hikes to 25 bp, which boosted demand for precious metals as a store of value.



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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.

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