The dollar index (DXY00) on Monday fell by -0.38%. The dollar retreated Monday as geopolitical risks in the Middle East eased slightly and curbed safe-haven demand for the dollar. There are a number of diplomatic efforts to contain the Israel-Hamas war. Also, Monday’s rally in stocks has reduced the liquidity demand for the dollar. Higher T-note yields on Monday provided underlying support for the dollar.
Monday’s U.S. economic news slightly supported the dollar after the Oct Empire manufacturing survey general business conditions fell -6.5 to -4.6, a smaller decline than expectations for a decline to the level of -6.0.
Comments Monday from U.S. Treasury Secretary Yellen were bullish for the dollar when she said higher interest rates in the U.S. may persist while also saying the U.S. economy is "in a good place."
EUR/USD (^EURUSD) on Monday rose by +0.46%. The euro on Monday posted moderate gains due to a weaker dollar. Also, an easing of Eurozone political risks is bullish for EUR/USD after exit polls showed Poland’s pro-EU opposition party won a majority in parliamentary elections on Sunday.
The German Sep wholesale price index eased to -4.1% y/y from -2.7% y/y in Aug, the largest decline in over three years.
Dovish comments from ECB Governing Council member de Cos were bearish for the euro when he said the surge in global borrowing costs means ECB policymakers have probably done enough to tame inflation, and the September assessment that the level of interest rates was more appropriate "is even more valid today."
USD/JPY (^USDJPY) on Monday fell by -0.01%. The yen rose slightly Monday and found support on comments from Japanese currency chief Kanda that bolstered speculation Japan was close to intervening in currency markets to support the yen when he said, “We will take appropriate action on forex if necessary.” Gains in the yen were limited as easing geopolitical tensions in the Middle East reduced the safe-haven demand for the yen. The yen was also under pressure after Japan's industrial production for August was revised lower. In addition, higher T-note yields on Monday undercut the yen.
Japan Aug industrial production was revised downward to -0.7% m/m from the initially reported unchanged m/m.
December gold (GCZ3) on Monday closed -7.20 (-0.37%), and Dec silver (SIZ23) closed -0.130 (-0.57%). Precious metals prices on Monday closed moderately lower as diplomatic efforts to contain the conflict between Israel and Hamas eased geopolitical risks in the Middle East and reduced safe-haven demand for precious metals. Also, higher global bond yields on Monday were negative for precious metals. In addition, hawkish comments from U.S. Treasury Secretary Yellen undercut precious metals when she said higher interest rates in the U.S. may persist. A weaker dollar on Monday and the ongoing Israeli-Hamas conflict provided underlying support for precious metals prices.
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.
