Dollar Firms with T-note Yields
The dollar index (DXY00) on Friday rose by +0.07%. The dollar Friday posted modest gains, supported by higher T-note yields. Also, Friday’s U.S. reports showed the University of Michigan Jan consumer sentiment climbed to a 9-month high, and Dec pending home sales unexpectedly increased, which were bullish for the dollar. Strength in stocks Friday cubed liquidity demand for the dollar.
Friday’s U.S. economic news was primarily bullish for the dollar. Dec personal income rose +0.2% m/m, right on expectations. Also, Dec pending home sales unexpectedly rose +2.5% m/m, stronger than expectations of -1.0% m/m and the biggest increase in 14 months. In addition, the University of Michigan U.S Jan consumer sentiment was revised up by +0.3 to a 9-month high of 64.9. On the bearish side, Dec personal spending fell -0.2% m/m, right on expectations and the biggest decline in a year.
EUR/USD (^EURUSD) on Friday fell by -0.21%. A stronger dollar Friday weighed on the euro. Also, an unexpected decline in Franc Jan consumer confidence to a 4-month low was bearish for the euro. However, losses in EUR/USD were limited Friday after the 10-year German bund yield rose to a 2-week high, strengthening the euro’s interest rate differentials.
Eurozone Dec M3 money supply rose +4.1% y/y, weaker than expectations of +4.6% y/y and the slowest pace of increase in nearly four years.
The France Jan consumer confidence indicator unexpectedly fell -1 to a 4-month low of 80, weaker than expectations of an increase to 83.
USD/JPY (^USDJPY) on Friday fell by -0.26%. The yen Friday moved moderately higher after Japan’s Jan Tokyo CPI report showed rising price pressures, which may prompt the BOJ to end its ultra-easy monetary policy. Gains in the yen Friday were limited due to stronger T-note yields.
Japan Tokyo Jan CPI ex-fresh food rose +4.3% y/y, stronger than expectations of +4.2% y/y and the fastest pace of increase in 41 years. Also, the Tokyo Jan CPI ex-fresh food and energy rose +3.0% y/y, stronger than expectations of +2.9% y/y and the fastest pace of increase in 31 years.
February gold (GCG3) on Friday closed down -0.60 (-0.03%), and March silver (SIH23) closed down -0.398 (-1.66%). Precious metals Friday were under pressure from a stronger dollar. Also, higher global bond yields were bearish for metals prices. In addition, a rally in the S&P 500 to a 6-week high curbed safe-haven demand for precious metals. Gold prices recouped most of their losses Friday after the U.S. Dec PCE core deflator rose at the slowest pace in 14 months, which bolstered speculation the Fed may slow its rate hike campaign.
More Precious Metal News from Barchart
- Stocks Recover Early Losses as U.S. Inflation Cools
- U.S. Economic Strength Boosts the Dollar
- Stocks Climb on Tech Strength and U.S. Economic Optimism
- Dollar Falls on Speculation Fed May Soon Pause Rate Hikes
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.