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Dollar Gains as Stocks Slump

Barchart - Tue Dec 6, 2022
Dollars and Wallets - Pile of Money with Hands

The dollar index (DXY00) on Tuesday rose by +0.26%.  The dollar Tuesday recovered from early losses and moved moderately higher. A sell-off in the S&P 500 Tuesday to a 2-1/2 week low boosted liquidity demand for the dollar.  The dollar Tuesday initially moved lower on lower T-note yields and on economic news that showed the U.S Oct trade deficit widened to a 4-month high. 

Tuesday’s U.S. economic news was slightly bearish for the dollar after the Oct trade deficit widened to -$78.2 billion from -$74.1 billion in Sep, the most in 4 months but narrower than expectations of -$80.0 billion.

EUR/USD (^EURUSD) on Tuesday fell by -0.28%.  The euro Tuesday gave up an early advance and posted moderate losses.   A rebound in the dollar Tuesday weighed on EUR/USD along with economic news that showed the German Nov S&P Global construction PMI contracted by the most in 1-3/4 years.  However, losses in the euro were limited after German Oct factory orders rose more than expected.

The German Nov S&P Global construction PMI fell -2.3 to 41.5, the steepest pace of contraction in 1-3/4 years.

German Oct factory orders rose +0.8% m/m, stronger than expectations of +0.1% m/m. 

USD/JPY (^USDJPY) on Tuesday rose by +0.14%.  Dollar strength Tuesday weighed on the yen along with Japanese economic news that showed Oct real cash earnings fell -2.6% y/y, weaker than expectations of -2.2% y/y and the biggest decline in more than seven years. Losses in the yen Tuesday were limited due to a decline in T-note yields and news that showed Japan Oct household spending rose +1.2% y/y, stronger than expectations of +0.9% y/y.

February gold (GCG3) on Tuesday closed up +1.10 (+0.06%), and March silver (SIH23) closed down -0.082 (-0.37%).  Precious metals Tuesday gave up early gains and settled mixed.   A stronger dollar Tuesday was bearish for metals prices.  Gold prices found support Tuesday from lower global government bond yields.  An easing of Chinese Covid curbs may boost economic activity that supports industrial metals demand and silver prices after Beijing on Tuesday joined Shanghai, Shenzhen, Guangzhou, and other major Chinese cities in scrapping Covid testing requirements to enter most public venues.  Gold continues to be undercut by fund liquidation as long positions in gold ETF’s dropped to a new 2-1/2 year low Monday.



More Precious Metal 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.

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