The dollar index (DXY00) on Thursday fell by -0.47%. The dollar Thursday moved lower for the third straight session and posted a 10-week low. Thursday’s U.S. PPI and initial unemployment claims reports were dovish for Fed policy and weighed on the dollar. A rally in the euro Thursday to a 1-year high also undercut the dollar. In addition, strength in stocks Thursday reduced liquidity demand for the dollar.
U.S. weekly initial unemployment claims rose +11,000 to 239,000, showing a weaker labor market than expectations of 235,000. However, weekly continuing claims unexpectedly fell -13,000 to 1.810 million, showing a stronger labor market than expectations of an increase to 1.833 million.
The U.S. Mar final-demand PPI eased to +2.7% y/y from +3.9% y/y in Feb, weaker than expectations of +3.0% y/y and the weakest report in more than 2 years. Mar PPI ex-food and energy eased to +3.4% y/y from +4.8% y/y, right on expectations and the weakest report in 2 years.
EUR/USD (^EURUSD) on Thursday rose by +0.49% and posted a 1-year high. Thursday’s U.S. PPI and initial unemployment claims reports battered the dollar and gave the euro a boost. Also, central bank divergence is giving EUR/USD a boost on speculation the Fed may be close to ending its rake-hike campaign while the ECB continues to raise interest rates.
Thursday’s Eurozone economic news supported the euro after Eurozone Feb industrial production rose +1.5% m/m, stronger than expectations of +1.0% m/m and the largest increase in 6 months.
Hawkish ECB rhetoric Thursday supported EUR/USD after ECB Governing Council member Kazaks said, "At the current moment, I would certainly not exclude another 50 bp rate hike" at the May ECB meeting. Also, ECB Governing Council member Scicluna said there's "still some way to go" on interest rate increases.
USD/JPY (^USDJPY) on Thursday fell by -0.30%. The yen Thursday posted moderate gains. A surge in foreign demand for Japanese stocks is bullish for the yen after the Ministry of Finance reported Thursday that overseas funds bought a net 2.4 trillion yen ($18 billion) of Japanese stocks in the week ending April 7, the highest amount for a weekly period ever. Higher T-note yields Thursday limited gains in the yen.
June gold (GCM3) on Thursday closed up +30.40 (+1.50%), and May silver (SIK23) closed up +0.467 (+1.83%). Precious metals Thursday moved higher, with gold posting a 13-month high and silver prices posting an 11-3/4 month high. A slump in the dollar Thursday to a 10-week low was bullish for metals prices. Metals also gained on Thursday’s dovish U.S. economic reports. In addition, gold has support on strong demand from fund buying as gold holdings in exchange-traded funds (ETFs) rose to a 2-1/2 month high Wednesday.
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.
