The dollar index (DXY00) on Thursday fell by -0.40%. A decline in T-note yields Thursday undercut the dollar. Also, hawkish comments from ECB Vice President de Guindos boosted the euro and weighed on the dollar. Losses in the dollar were limited after weekly U.S. jobless claims rose less than expected, and the U.S. Aug trade deficit shrank to a nearly 3-year low.
Thursday’s U.S. economic news was bullish for the dollar. Weekly initial unemployment claims rose +2,000 to 207,000, showing a stronger labor market than expectations of 210,000. Also, the Aug trade deficit shrank to a nearly 3-year low of -$58.3 billion from -$64.7 billion in July, a narrower deficit than expectations of -$59.8 billion.
Dovish comments Thursday from San Francisco Fed President Daly weighed on the dollar when she said, "If we continue to see a cooling labor market and inflation heading back to our target, we can hold interest rates steady and let the effects of policy continue to work."
EUR/USD (^EURUSD) on Thursday rose by +0.40%. The euro Thursday rose moderately and found support on comments from ECB Vice President de Guindos, who said that given still strong inflation, it is "premature" to discuss a potential reduction of interest rates. Gains in the euro were limited by Thursday’s weaker-than-expected German Aug trade news and the record contraction in the German Sep S&P construction PMI.
Thursday’s Eurozone economic news was weaker-than-expected and bearish for the euro. German Aug exports fell -1.2% m/m, weaker than expectations of -0.6% m/m. Also, Aug imports unexpectedly fell -0.4% m/m versus expectations of a +0.5% m/m increase. In addition, the German Sep S&P construction PMI fell -2.2 to 39.3, the weakest level since the data series began in 2020.
USD/JPY (^USDJPY) on Thursday fell by -0.46%. The yen moved higher Thursday on a decline in T-note yields. The yen also garnered support from higher Japanese government bond yields after the 10-year JGB bond yield Thursday rose to a 10-year high of 0.814%.
December gold (GCZ3) on Thursday closed -3.00 (-0.16%), and Dec silver (SIZ23) closed -0.127 (-0.60%). Precious metals prices on Thursday extended this week’s losses, with gold posting a 7-month low. Hawkish comments from ECB Vice President de Guindos undercut gold Thursday when he said that given still strong inflation, it is "premature" to discuss a potential reduction of interest rates. Also, a fall in the 10-year breakeven inflation rate Thursday to a 4-week low reduced demand for gold as an inflation hedge. In addition, long liquidation pressures are weighing on gold after long gold holdings in ETFs fell to a 3-1/2 year low on Wednesday. A weaker dollar Thursday was supportive of precious metals prices, as was a decline in global bond yields.
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.
