The dollar index (DXY00) on Tuesday fell by -0.22%.  The dollar on Tuesday fell back from a 3-week high and posted moderate losses.  Weaker-than-expected U.S. JOLTS job openings and factory orders reports knocked T-note yields lower and undercut the dollar.  The dollar Tuesday initially rose on expectations for the Fed to raise interest rates by +25 bp after the Tue/Wed FOMC meeting.

Tuesday’s weaker-than-expected U.S. economic news was bearish for the dollar.  Mar JOLTS job openings fell -341,000 to a 23-month low of 9.59 million, showing a weaker labor market than expectations of 9.736 million. Also, Mar factory orders rose +0.9% m/m, weaker than expectations of +1.2% m/m.

EUR/USD (^EURUSD) on Tuesday rose by +0.25%.  The euro Tuesday recovered from a 1-week low and rose moderately.  Dollar weakness Tuesday sparked short covering in EUR/USD.  Also, expectations for the ECB to raise interest rates by +25 bp at Thursday’s policy meeting were supportive of the euro. EUR/USD Tuesday initially moved lower after several economic reports showed an easing of Eurozone Apr core consumer price pressures, an easing of European loan demand in the ECB’s quarterly Bank Lending Survey, and an unexpected decline in German Mar retail sales. 

The ECB's quarterly Bank Lending Survey said credit standards "tightened further substantially" in Q1, and the decline in net loan demand from firms was more than foreseen by banks in the previous three months and the most since the global financial crisis.

Eurozone Apr CPI rose +7.0% y/y, stronger than expectations of +6.9% y/y.  However, Apr core CPI eased to +5.6% y/y from +5.7% y/y in March, right on expectations.

Eurozone Mar M3 money supply eased to +2.5% y/y from +2.9% y/y in Feb, the slowest pace of increase in 8-1/2 years.

The Eurozone Apr S&P manufacturing PMI was revised upward by +0.3 to 45.8, from the initially reported 45.5.

German Mar retail sales unexpectedly fell -2.5% m/m, weaker than expectations of +0.4% m/m and the biggest decline in 5 months.

USD/JPY (^USDJPY) on Tuesday fell by -0.71%.  The yen Tuesday recovered from a 7-week low against the dollar and moved moderately higher.  A sharp decline in T-note yields Tuesday sparked short covering in the yen.  The yen Tuesday initially posted a new 7-week low against the dollar on central bank divergence, with the Fed and ECB expected to raise interest rates this week while the BOJ maintains QE and record low interest rates. 

June gold (GCM3) on Tuesday closed up +31.10 (+1.56%), and July silver (SIN23) closed up +0.389 (+1.54%).  Precious metals Tuesday posted moderate gains, with gold climbing to a 2-week high.  A weaker dollar Tuesday was positive for metals prices.  A decline in global bond yields Tuesday was also bullish for metals.  In addition, precious metals have safe-haven support on concerns about the health of the U.S. banking system and as the U.S. government gets nearer to default without an extension of the debt ceiling.  A bearish factor for metals was Tuesday’s action by the Reserve Bank of Australia to unexpectedly hike its benchmark interest rate by +25 bp to 3.85%.

• Bank Jitters and Debt Ceiling Weigh on Stocks
• Better-Than-Expected U.S. Economic Reports Boost the Dollar
• Stocks Mixed on Corporate Earnings and Economic Optimism
• Dollar Gains on Strength in U.S. Economic News and Yen Weakness