The dollar index (DXY00) Thursday fell -0.22%. The dollar on Thursday fell back from a 3-week high and posted moderate losses. A sell-off in global equity markets Thursday boosted demand for the Japanese yen as a safe haven as the yen climbed to a 1-week high against the dollar. Also, the euro rose against the dollar after German May factory orders rose more than expected by the most in almost three years. Losses in the dollar were contained after stronger-than-expected reports on U.S. Jun ADP employment and Jun ISM services pushed bond yields higher.
The U.S. Jun ADP employment change surged by +497,000, well above expectations of +225,000 and the most in 16 months, signaling strength in the U.S. labor market.
U.S. weekly initial unemployment claims rose +12,000 to 248,000, slightly more than expectations of +245,000. Weekly continuing claims fell -13,000 to a 4-month low of 1.720 million, showing a stronger labor market than expectations of 1.737 million.
The U.S. May trade deficit shrank to -$69.0 billion from -$74.4 billion in Apr, right on expectations.
U.S. May JOLTS job openings fell -496,000 to 9.824 million, showing a weaker labor market than expectations of 9.900 million.
The U.S. Jun ISM services index rose +3.6 to a 4-month high of 53.9, stronger than expectations of 51.2.
Comments Thursday from Dallas Fed President Logan were hawkish for Fed policy and bullish for the dollar when she said, "I think more-restrictive monetary policy will be needed to achieve the FOMC's goals of stable prices and maximum employment."
EUR/USD (^EURUSD) Thursday rose +0.28%. The euro on Thursday recovered from a 3-week low and posted moderate gains. Short covering emerged in EUR/USD after Thursday’s report showed German May factory orders rose more than expected by the most in almost three years. The euro Thursday initially moved lower as U.S. bond yields rose on the hawkish minutes of the Jun 13-14 FOMC meeting.
Eurozone May retail sales were unchanged m/m, weaker than expectations of +0.2% m/m.
The German Jun S&P construction PMI fell -2.5 to 41.4, the steepest pace of contraction in 2-1/3 years.
German May factory orders rose +6.4% m/m, stronger than expectations of +1.0% m/m and the largest increase in almost three years.
USD/JPY (^USDJPY) on Thursday fell -0.37%. The yen on Thursday climbed to a 1-week high against the dollar and found support on the slump in global equity markets, which has sparked safe-haven demand for the yen. Also, rising JGB bond yields have strengthened the yen’s interest rate differentials after the 10-year JGB bond yield Thursday rose to a 2-1/2 week high. Higher T-note yields Thursday limited the upside in the yen.
August gold (GCQ3) Thursday closed down -11.7 (-0.61%), and Sep silver (SIU23) closed down -0.512 (-2.19%). Precious metals prices Thursday posted moderate losses. Metals prices fell on negative carryover from Wednesday’s hawkish minutes of the Jun 13-14 FOMC meeting. Also, hawkish comments from New York Fed President Williams and Dallas Fed President Logan undercut metals when they said the Fed has more work to do on monetary policy. Metals prices fell further after bond yields rose even higher when the U.S Jun ADP employment and Jun ISM services reports rose more than expected, a hawkish factor for Fed policy. In addition, the prospects of additional Fed rate hikes have sparked fund liquidation of gold as holdings in gold ETFs fell to a 3-1/2 month low Wednesday.
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.
