The dollar index (DXY00) on Friday rose by +0.04%. An increase in safe-haven demand Friday boosted the dollar today on concerns the conflict between Israel and Hamas could widen after Iran’s foreign minister said Hezbollah militants could open a new front in the Israeli war if the blockade of Gaza and attacks there on civilians continue. The dollar fell back from its best levels on dovish comments from Philadelphia Fed President Harker, and after the University of Michigan U.S. Oct consumer sentiment index fell more than expected to a 5-month low.
The U.S. Sep import price index ex-petroleum fell -0.3% m/m, weaker than expectations of -0.1% m/m.
The University of Michigan U.S. Oct consumer sentiment index fell -5.1 to a 5-month low 63.0, weaker than expectations of 67.0.
The University of Michigan U.S. Oct 1-year inflation expectations unexpectedly rose to +3.8%, higher than expectations of no change at 3.2%. Also, the Oct 5-10-year inflation expectations rose to +3.0%, higher than expectations of no change at 2.8%.
Philadelphia Fed President Harker said disinflation is underway, and "I believe that we are at the point where we can hold rates where they are."
EUR/USD (^EURUSD) on Friday fell by -0.17%. A stronger dollar on Friday weighed on the euro. Also, comments from ECB President Lagarde Friday undercut EUR/USD when she signaled additional ECB rate hikes may be on hold when she said, “We are seeing tightening of financing conditions like it has never happened before.” Losses in the euro were limited after Eurozone Aug industrial production rose more than expected.
Comments from ECB President Lagarde signaled additional ECB rate hikes may be on hold when she said, “We are seeing tightening of financing conditions like it has never happened before,” and the ECB will gauge the impact of prior rate hikes that are still feeding through the financial system.
Eurozone Aug industrial production rose +0.6% m/m, stronger than expectations of +0.2% m/m and the biggest increase in 4 months.
USD/JPY (^USDJPY) on Friday fell by -0.19%. The yen rose moderately Friday as ramped-up geopolitical concerns in the Middle East boosted some safe-haven demand for the yen. Also, the decline in T-note yields Friday was supportive of the yen.
December gold (GCZ3) on Friday closed +58.50 (+3.11%), and Dec silver (SIZ23) closed +0.936 (+4.26%). Precious metals prices Friday rallied sharply, with gold posting a 2-1/2 week high and silver posting a 2-week high. Concerns that the conflict between Israel and Hamas could escalate throughout the Middle East sparked safe-haven buying of precious metals after Iran’s foreign minister said Hezbollah militants could open a new front in the Israeli war if the blockade of Gaza and attacks there on civilians continue. Also, lower global bond yields Friday were bullish for precious metals. Gold garnered additional support on increased demand as an inflation hedge after the University of Michigan U.S. Oct inflation expectations unexpectedly increased, and after the 10-year breakeven inflation rate jumped to a 2-week high of 2.369%.
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.
