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Dollar Gains on Higher Bond Yields

Barchart - Tue Nov 29, 2022

The dollar index (DXY00) on Tuesday rose by +0.17%.   Higher T-note yields Tuesday supported the small gain in the dollar.  Also, weakness in stocks spurred liquidity demand for the dollar.  However, gains in the dollar were limited by reduced safe-haven demand after the Chinese government pledged to boost vaccinations among its senior citizens, and its National Health Commission said local authorities must avoid using excessive pandemic restrictions. 

Tuesday’s U.S. economic news was mixed for the dollar.  The Sep S&P CoreLogic composite-20 home price index rose +10.43% y/y, slightly below expectations of +10.55% y/y and the slowest pace of increase in 1-3/4 years. The Conference Board U.S. Nov consumer confidence index fell -2.0 to a 4-month low of 100.2, slightly stronger than expectations of 100.0.

EUR/USD (^EURUSD) on Tuesday fell by -0.15%.  Strength in the dollar Tuesday weighed on the euro. Also, an easing of German consumer price pressures is dovish for ECB policy and weighed on the euro after German Nov CPI eased to +11.3% y/y from +11.6% y/y in Oct.

Eurozone economic news supported EUR/USD after Eurozone Nov economic confidence rose +1.0 to 93.7, stronger than expectations of 93.2. 

USD/JPY (^USDJPY) on Tuesday fell -0.17%.  The yen rose moderately Tuesday after a fall in Japan’s Nikkei Stock Index to a 1-week low sparked some safe-haven demand for the yen. Gains in the yen were limited by higher T-note yields. 

December gold (GCZ2) on Tuesday closed up +8.10 (+0.47%), and December silver (SIZ22) closed up +0.289 (+1.38%).  Precious metals Tuesday posted moderate gains.  Weakness in stocks Tuesday sparked some safe-haven buying of precious metals.  Silver prices also found support on speculation China will move to ease pandemic restrictions, which would be positive for economic activity and industrial metals demand.  A stronger dollar and higher T-note yields Tuesday limited gains in gold.   Also, an easing of Covid protests in China has curbed some safe-haven demand for gold.

More Forex News from BarchartOn 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.

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