The dollar index (DXY00) on Tuesday fell by -0.37%. Dovish Fed comments Tuesday from Chicago Fed President Goolsbee and New York Fed President Williams weighed on the dollar. Also, strength in the euro weighed on the dollar Tuesday after a gauge of Eurozone investor confidence rose more than expected.
Fed comments Tuesday were dovish for monetary policy and bearish for the dollar. Chicago Fed President Goolsbee said the Fed should "gather further data and be careful about raising interest rates too aggressively until we see how much work the headwinds from the banking turmoil are doing for us in getting down inflation."
Also, New York Fed President Williams said monetary policy is in a restrictive stance and the Fed's median forecast for one more 25 bp rate hike this year followed by a pause is a "reasonable starting place." He added that if inflation comes down, the Fed will need to lower interest rates.
EUR/USD (^EURUSD) on Tuesday rose by +0.49%. Dollar weakness Tuesday sparked short covering in the euro. Also, Tuesday’s Eurozone economic news that showed a larger-than-expected increase in Eurozone Apr Sentix investor confidence gave EUR/USD a boost.
Eurozone Feb retail sales fell -0.8% m/m, right on expectations.
Eurozone Apr Sentix investor confidence rose +2.4 to -8.7, stronger than expectations of -10.1.
USD/JPY (^USDJPY) on Tuesday rose by +0.10%. The yen Tuesday fell modestly but remained above Monday’s 3-1/2 week low against the dollar. Higher T-note yields Tuesday weighed on the yen, along with news that Japan’s Mar machine tool orders posted their biggest decline in 2-1/2 years.
Japan Mar machine tool orders fell -15.2% y/y, the third consecutive monthly drop and the largest decline in 2-1/2 years.
June gold (GCM3) on Tuesday closed up +15.20 (+0.76%), and May silver (SIK23) closed up +0.274 (+1.10%). Precious metals Tuesday posted moderate gains. Weakness in the dollar Tuesday was supportive of metals prices. Also, short covering ahead of Wednesday’s U.S. CPI report pushed metals prices higher. In addition, gold is supported by fund buying as gold holdings in exchange-traded funds (ETFs) rose to a 10-week high Monday. Higher global bond yields Tuesday limited the upside in precious metals.
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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.
