The dollar index (DXY00) on Monday fell by -0.46% and posted a 1-week low. The dollar was under pressure from weaker T-note yields. Also, the weaker-than-expected Dallas Fed report weighed on the dollar. In addition, hawkish ECB comments Monday boosted EUR/USD to a 1-week high and undercut the dollar.
The U.S. Apr Dallas Fed manufacturing activity index unexpectedly fell -7.7 to a 9-month low of -23.4, weaker than expectations of an increase to -12.0.
EUR/USD (^EURUSD) on Monday rose by +0.53%. The euro Monday rallied to a 1-week high. A larger-than-expected increase in the German Apr IFO business climate index to a 14-month high gave the euro a boost Monday. Also, hawkish comments Monday from ECB Governing Council member Wunsch sparked gains in EUR/USD when he said the ECB would only agree to halt interest rate increases once wage growth starts to fall.
The German Apr IFO business climate index rose +0.4 to a 14-month high of 93.6, stronger than expectations of 93.4.
ECB Governing Council member Wunsch said we are "not seeing" inflation going in the right direction yet, and the ECB will only agree to halt interest rate increases once wage growth starts to fall. "We are waiting for wage growth and core inflation to go down, along with headline inflation, before we can arrive at the point where we can pause."
USD/JPY (^USDJPY) on Monday rose by +0.12%. The yen moved lower Monday on comments from BOJ Governor Ueda that downplayed expectations of a shift in BOJ policy at this week’s meeting when he said the BOJ is not at a stage to talk about how to normalize YCC and that premature talk on tweaking YCC could confuse the markets. Losses in the yen Monday were contained due to a decline in T-note yields.
June gold (GCM3) on Monday closed up +9.60 (+0.47%), and May silver (SIK23) closed up +0.253 (+1.01%). Precious metals Monday recovered from early losses and posted moderate gains. A decline in the dollar index Monday to a 1-week low was bullish for metals prices. Also, lower T-note yields Monday were supportive for metals.
Precious metals Monday initially moved lower on the prospects of additional rate hikes from global central banks after ECB Governing Council member Wunsch said the ECB would only agree to halt interest rate increases once wage growth starts to fall. Silver was also under early pressure Monday on negative carryover from a slump in iron ore prices Monday to a 4-month low and a drop in copper prices to a 2-1/2 week low.
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.
