The dollar index (DXY00) on Monday rose by +0.50% and posted a 1-week high. Higher T-note yields Monday were supportive of the dollar. Also, expectations for the Fed to raise interest rates by 25 bp at Wednesday’s FOMC meeting are positive for the dollar. In addition, weakness in the yen lent support to the dollar after the yen dropped to a 7-week low against the dollar. Gains in the dollar accelerated on Monday’s stronger-than-expected U.S. construction spending and ISM manufacturing reports.
Monday’s stronger-than-expected U.S. economic news was supportive of the dollar. The Apr ISM manufacturing index rose +0.8 to 46.1, stronger than expectations of 46.8. Also, Mar construction spending rose +0.3% m/m, stronger than expectations of +0.1% m/m and the largest increase in 4 months.
EUR/USD (^EURUSD) on Monday fell by -0.46%. Dollar strength on Monday undercut the euro. However, losses in EUR/USD were limited by expectations for the ECB to raise interest rates by 25 bp at Thursday’s policy meeting. Trading activity in the euro was subdued Monday, with European markets closed for the Labor Day holiday.
USD/JPY (^USDJPY) on Monday rose by +0.89%. The yen on Monday extended last Friday’s losses and posted a 7-week low against the dollar. The yen was weighed down by carryover pressure from last Friday after the BOJ kept monetary policy unchanged and said it would “patiently” continue with monetary easing. Higher T-note yields Monday also weighed on the yen. On the other hand, a positive factor for the yen was the larger-than-expected increase in the Japan Apr consumer confidence index to a 14-month high.
The Japan Apr consumer confidence index rose +1.5 to a 14-month high of 35.4, stronger than expectations of 34.5.
June gold (GCM3) on Monday closed down -6.90 (-0.35%), and July silver (SIN23) closed up +0.004 (+0.02%). Precious metals Monday settled mixed, with silver posting a 2-week high. A rally in the dollar index Monday to a 1-1/2 week high undercut metals prices. Also, a jump in the 10-year T-note yield to a 1-week high weighed on precious metals. However, silver prices posted modest gains on Monday’s stronger-than-expected U.S. construction spending and ISM manufacturing reports, which shows strength in industrial metals demand.
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.
