The dollar index (DXY00) Friday rose +0.03% but remained below Thursday’s 5-3/4 month high. The dollar on Friday recovered from early losses after T-note yields moved higher after being lower most of the session. Also, pessimism in China’s economic outlook prompted the yuan to fall to a 15-year low against the dollar.
Friday’s U.S. economic news was bearish for the dollar after Jul consumer credit rose +$10.399 billion, weaker than expectations of +$16.000 billion.
Thursday night’s comments from Dallas Fed President Logan were slightly dovish for Fed policy and bearish for the dollar when she said, "Another skip in raising interest rates could be appropriate when the FOMC meets later this month. But skipping does not imply stopping, and in coming months, further evaluation of the data and outlook could confirm that we need to do more to extinguish inflation."
EUR/USD (^EURUSD) Friday rose by +0.04%. Stronger-than-expected French economic news today is bullish for EUR/USD. The euro also garnered support on a slight increase in expectations for an ECB rate hike next Thursday. The odds for a rate hike rose to 38% Friday from 34% on Thursday for a +25 bp rate hike at the September 14 ECB meeting.
France Jul manufacturing production rose +0.7% m/m, stronger than expectations of +0.4% m/m. Also, July industrial production rose +0.8% m/m, stronger than expectations of +0.1% m/m.
USD/JPY (^USDJPY) Friday rose by +0.38%. The yen on Friday matched Thursday’s 10-month low. The yen Friday gave up overnight gains and turned lower on weaker-than-expected Japanese economic news on Q2 GDP and July wage data. The yen extended its losses Friday afternoon when T-note yields recovered from early declines and moved higher.
The yen Friday initially moved higher amid speculation the Japanese government may step up its effort to stop the yen’s weakening after Japanese Finance Minister Suzuki said he would appropriately address excessive moves in the foreign exchange market.
Friday’s Japanese economic news was weaker than expected and bearish for the yen. Japan's Q2 GDP was revised lower to +4.8% (q/q annualized) from the previously reported +6.0%, weaker than expectations of +5.6%. Also, July labor cash earnings rose +1.3% y/y, weaker than expectations of +2.4% y/y. In addition, the Japan Aug eco watchers outlook survey fell -2.7 to a 6-month low of 51.4, weaker than expectations of 53.4.
October gold (GCV3) Friday closed +0.50 (+0.03%), and December silver (SIZ23) closed -0.066 (-0.28%). Precious metals prices on Friday settled mixed, with silver matching Thursday’s 2-1/2 week low. Dovish comments from Dallas Fed President Logan boosted gold when she said she supported a pause in Fed rate hikes. Gold prices fell back from their best levels, and silver prices turned negative after the dollar recovered from early losses and moved higher. Precious metals were also undercut after T-note yields gave up early declines and moved higher. Also, continued liquidation of gold holdings by funds in bearish for gold after long gold holdings in ETFs fell to a 3-1/3 year low Thursday.
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.
