The dollar index (DXY00) on Monday recovered from a 2-1/2 week low and finished slightly higher by +0.06%. The dollar Monday rebounded from overnight losses and posted modest gains on strength in T-note yields. Also, a decline in the yuan to a 6-1/4 month low Monday was positive for the dollar. On the negative side are expectations for the Fed to pause its rate hike campaign after the Tue/Wed FOMC meeting. Also, the strength in stocks Monday has curbed liquidity demand for the dollar.
EUR/USD (^EURUSD) on Monday climbed to a 2-1/2 week high and rose by +0.09%. The main bullish factor for the euro is central bank divergence on the prospects for the Fed to pause raising interest rates this week while the ECB continues to raise interest rates. A rebound in the dollar Monday limited gains in EUR/USD.
USD/JPY (^USDJPY) on Monday rose by +0.15%. The yen on Monday gave up overnight gains and moved slightly lower. Monday’s Japanese economic reports were dovish for BOJ policy and negative for the yen after Japan's May PPI rose less than expected and after May machine tool orders posted their largest decline in 2-3/4 years. Higher T-note yields Monday also weighed on the yen.
Japan May PPI eased to +5.1% y/y from +5.9% y/y in Apr, slower than expectations of +5.6% y/y.
Japan May machine tool orders fell -22.2% y/y, the steepest pace of decline in 2-3/4 years.
August gold (GCQ3) on Monday closed down -7.50 (-0.38%), and July silver (SIN23) closed down -0.351 (-1.44%). Precious metals Monday posted moderate losses. A recovery in the dollar Monday was bearish for metals prices after the dollar index rebounded from a 2-1/2 week low and moved higher. Also, strength in stocks Monday has reduced safe-haven demand for precious metals. Losses in precious metals were limited by the prospects for the Fed to pause its rake hike campaign at the Tue/Wed FOMC meeting.
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.
