The dollar index (DXY00) Friday rose by +0.22%. The dollar on Friday moved higher for a fourth session and posted a 1-week high. Weakness in the yen supported gains in the dollar as the yen on Friday dropped to a 1-1/2 week low against the dollar. The dollar is also supported by nearly unanimous expectations for the Fed to raise the fed funds rate by +25 bp at next week’s FOMC meeting.
EUR/USD (^EURUSD) Friday fell by -0.09% and posted a 1-week low. Strength in the dollar Friday weighed on the euro. Losses in EUR/USD were limited by expectations for the ECB to raise interest rates by +25 bp at next week’s policy meeting.
USD/JPY (^USDJPY) on Friday rose by +1.21%. The yen Friday retreated to a 1-1/2 week low against the dollar. The yen weakened on a report that said BOJ officials see little urgent need to change their yield curve control program at this point, signaling it will keep its extremely easy monetary policy in place at next week’s BOJ meeting. Friday’s Japan June consumer price report was mixed for the yen after the pace of June consumer prices rose, but core prices eased.
BOJ officials reportedly said their overall assessment of financial markets remains unchanged and that they see little urgent need to change its yield curve control program at this point.
Japan’s June national CPI unexpectedly increased to 3.3% y/y from +3.2% y/y in May, stronger than expectations of +3.2% y/y. However, June national CPI ex-fresh food and energy eased to +4.2% y/y from +4.3% y/y in May, right on expectations.
August gold (GCQ3) Friday closed down -4.3 (-0.22%), and Sep silver (SIU23) closed down -0.107 (-0.43%). Precious metals prices on Friday posted moderate losses, with silver falling to a 1-week low. Friday’s rally in the dollar index to a 1-week high undercut metals prices. Also, strength in stocks on Friday curbed the safe-haven demand for precious metals. In addition, expectations for the Fed and ECB to raise interest rates next week are undercutting metals prices. A decline in T-note yields on Friday was a supportive factor for precious metals. Also, the jump in the 10-year breakeven inflation rate Friday to a 4-1/2 month high boosted some demand for gold as an inflation hedge.
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.
