The dollar index (DXY00) on Thursday rose by +0.16%. The dollar Thursday recovered from a 6-week low and posted moderate gains.  A reversal in stocks Thursday sparked short covering in the dollar after the S&P 500 erased an early rally and turned lower on a slump in bank stocks.  Also, weakness in the euro boosted the dollar after the Eurozone Mar consumer confidence indicator unexpectedly declined.

Thursday’s U.S. economic data was mixed for the dollar.  On the bullish side, initial weekly unemployment claims unexpectedly fell -1,000 to 191,000, showing a stronger labor market than expectations of an increase to 197,000.  Also, Feb new home sales unexpectedly rose +1.1% to a 6-month high of 640,000, although that was weaker than expectations of 650,000 after a revision for January. On the bearish side, the Feb Chicago Fed national activity index fell -0.42 to -0.19, weaker than expectations of 0.10.

EUR/USD (^EURUSD) on Thursday fell by -0.18%.  The euro Thursday fell back from a 6-week high and posted moderate losses.  Hawkish comments Thursday from ECB Governing Council members Knot and Holzmann gave the euro a boost when they said they expect the ECB to keep raising interest rates.  However, EUR/USD gave up its gains and turned lower after the dollar recovered and after the Eurozone Mar consumer confidence indicator unexpectedly declined.

ECB Governing Council member Knot said "with the risks to the inflation outlook so strongly tilted to the upside, I expect the ECB to hike rates again in May."

ECB Governing Council member Holzmann said from today's point of view, the ECB will "probably have to add" to its recent increases in interest rates when officials next meet in May.

The Eurozone Mar consumer confidence indicator unexpectedly fell -0.1 to -19.2, weaker than expectations of an increase to -18.2.

USD/JPY (^USDJPY) on Thursday fell by -0.78%.  The yen Thursday extended Wednesday’s rally to a 1-1/2 month high against the dollar.  Speculation the Fed is getting close to the end of its rate-hike cycle has weakened the dollar and boosted the yen.  The Fed’s new dot plot released Wednesday shows policymakers are only expecting one more 25 bp rate hike this year.

April gold (GCJ3) on Thursday closed up +46.30 (+2.37%), and May silver (SIK23) closed up +0.470 (+2.06%).  Precious metals Thursday rallied sharply, with silver climbing to a 6-week high.  A reversal in stocks Thursday boosted the safe-haven demand for precious metals after stocks gave up early gains and moved lower.  Also, speculation the Fed was close to ending its rate-hike cycle is bullish for metals after the FOMC on Wednesday kept its peak fed funds rate estimate for the end of 2023 at 5.1%, signaling only one more 25 bp rate hike.  In addition, the recent banking turmoil has sparked fund buying of gold as gold holdings in exchange-traded funds (ETFs) rose to a 5-week high Wednesday.

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