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Euro FX(E6M23)

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Dollar Gains Ahead of Wednesday’s U.S. CPI Report

Barchart - Tue Sep 12, 2:34PM CDT

The dollar index (DXY00) Tuesday rose by +0.14%.  Tuesday’s weakness in stocks boosted the liquidity demand for the dollar.  Also, short covering in the dollar ahead of Wednesday’s U.S. August consumer price report lifted the dollar.

EUR/USD (^EURUSD) Tuesday fell by -0.18%.  Strength in the dollar on Tuesday weighed on the euro.  Also, uncertainty that the ECB will raise interest rates on Thursday is undercutting the euro as the markets are discounting the odds at only 52% that the ECB will raise interest rates by 25 bp at Thursday’s policy meeting.

Tuesday’s Eurozone economic news supported EUR/USD after the German Sep ZEW survey expectations of economic growth unexpectedly rose +0.9 to -11.4, stronger than expectations of a decline to -15.0.

USD/JPY (^USDJPY) Tuesday rose by +0.37%.  The yen Tuesday posted moderate losses.  Central bank divergence is bearish for the yen, with the ECB and Federal Reserve currently raising interest rates while the BOJ maintains record-low interest rates.  Higher Japanese government bond yields are bullish for the yen after the 10-year JGB bond yield on Tuesday climbed to a new 9-1/2 year high of 0.722%.

October gold (GCV3) Tuesday closed -12.00 (-0.62%), and December silver (SIZ23) closed +0.019 (+0.08%). Precious metals prices on Tuesday settled mixed, with gold falling to a 2-1/2 week low.  A stronger dollar on Tuesday was bearish for metals prices.  Also, the continued liquidation of gold holdings by funds is bearish for gold after long gold holdings in ETFs fell to a 3-1/3 year low Monday.  Losses in gold accelerated Tuesday on technical selling after prices fell below the 200-day moving average.  Lower global bond yields Tuesday were a bullish factor for precious metals.  Also, weakness in stocks Tuesday boosted some safe-haven demand for precious metals. 

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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.