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Dollar Follows T-note Yields Higher

Barchart - Fri Jun 9, 3:10PM CDT

The dollar index (DXY00) on Friday recovered from a 2-1/2 week low and finished higher by +0.20%.  Higher T-note yields Friday supported moderate gains in the dollar.  Also, weakness in the yen was bullish for the dollar after a Bloomberg report said BOJ officials still see the need to continue with monetary stimulus.  A negative factor for the dollar was Friday’s rally in stocks that curbed liquidity demand for the dollar.

EUR/USD (^EURUSD) on Friday fell by -0.30%.  A rebound in the dollar on Friday from a 2-1/2 week low sparked long liquidation in the euro.  Also, an unexpected decline in Italy's Apr industrial production raises economic concerns for the Eurozone and was bearish for EUR/USD.  Losses in the euro were limited by central bank divergence on the prospects for the Fed to pause raising interest rates next week while the ECB continues to raise interest rates.

Italy's Apr industrial production unexpectedly fell -1.9% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 7 months.

USD/JPY (^USDJPY) on Friday rose by +0.35%.  The yen was under pressure Friday from rising T-note yields. Also, a Bloomberg report Friday weighed on the yen when it said BOJ officials still see the need to continue with monetary stimulus, and they see little need to adjust yield-curve control (YCC) policy at next week’s policy meeting.  In addition, the sharp +1.9% jump in the Nikkei Stock Index Friday reduced the safe-haven demand for the yen.

August gold (GCQ3) on Friday closed down -1.40 (-0.07%), and July silver (SIN23) closed up +0.062 (+0.25%).  Precious metals on Friday settled mixed, with silver posting a 1-month high.  A stronger dollar on Friday was bearish for metals prices.  Also, higher global bond yields undercut metals prices.  In addition, Friday’s rally in the S&P 500 to a 9-3/4 month high has reduced the safe-haven demand for precious metals.  However, losses in gold were limited, and silver rose on the prospects for the Fed to pause its rake hike campaign at next week’s FOMC meeting.

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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.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.