The dollar index (DXY00) on Friday fell by -0.26%. The dollar Friday gave up an early advance and turned lower as a rebound in stock prices from early losses curbed liquidity demand for the dollar. Also, hawkish comments from ECB Executive Board member Schnabel boosted the euro at the dollar’s expense. The dollar Friday initially moved higher after T-note yields jumped on the stronger-than-expected U.S. Sep nonfarm payroll report.
Friday’s U.S. economic news was mixed for the dollar. On the negative side, Aug consumer credit unexpectedly fell -$15.62 billion, the biggest decline in 3-1/4 years and weaker than expectations of a +$11.700 billion increase. Conversely, Sep nonfarm payrolls surged +336,000, well above expectations of +170,000 and the largest increase in eight months. Also, Aug nonfarm payrolls were revised upward by 40,000 to +227,000 from the initially reported +187,000.
EUR/USD (^EURUSD) on Friday rose by +0.39%. The euro on Friday posted moderate gains as the dollar weakened. EUR/USD also garnered support on a stronger-than-expected German Aug factory orders report and on hawkish comments from ECB Executive Board member Schnabel, who said the ECB will continue to raise interest rates if inflation risks materialize.
German Aug factory orders rose +3.9% m/m, stronger than expectations of +1.5% m/m.
ECB Executive Board member Schnabel said, "I still see upside risks to inflation, and if they materialized, further interest rate hikes could be necessary."
USD/JPY (^USDJPY) on Friday rose by +0.54%. The yen Friday retreated as the better-than-expected U.S. Sep payrolls report pushed T-note yields higher. Also, Friday’s weaker-than-expected Japanese economic reports on Aug household spending and Aug labor cash earnings are dovish for BOJ policy and bearish for the yen. A supportive factor for the yen was the larger-than-expected increase in the Aug leading index CI to a 9-month high.
Japan Aug household spending fell -2.5% y/y, a smaller decline than expectations of -3.9% y/y.
Japan Aug labor cash earnings rose +1.1% y/y, weaker than expectation of +1.5% y/y.
The Japan Aug leading index CI rose +1.3 to a 9-month high of 109.5, stronger than expectations of 109.1.
December gold (GCZ3) on Friday closed +13.40 (+0.73%), and Dec silver (SIZ23) closed +0.704 (+3.35%). Precious metals prices on Friday recovered from early losses and closed moderately higher. Precious metals moved higher on a weaker dollar. Silver also garnered support from Friday’s stronger-than-expected German Aug factory orders report, a positive factor for industrial metals demand.
Friday’s better-than-expected U.S. Sep payrolls report pushed T-note yields higher and initially knocked gold prices down to a 7-month low before they recovered on the weak dollar. Also, hawkish comments from ECB Executive Board member Schnabel weighed on gold when she said additional ECB rate hikes may be necessary if inflation risks materialize. In addition, long liquidation pressures are weighing on gold after long gold holdings in ETFs fell to a 3-1/2 year low on Thursday.
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.
