The dollar index (DXY00) Friday fell by -0.51%. The dollar was under pressure Friday from falling T-note yields after U.S. Jul nonfarm payrolls rose less than expected. Losses in the dollar accelerated after Atlanta Fed President Bostic said there is no need to raise interest rates further to ease inflation.
Friday’s monthly U.S. payroll report was mixed for the dollar. On the negative side, Jul nonfarm payrolls rose +187,000, below expectations of +200,000. Conversely, the Jul unemployment rate unexpectedly fell -0.1 to 3.5%, showing a stronger labor market than expectations of 3.6%. Also, Jul average hourly earnings rose +0.4% m/m and +4.4% y/y, stronger than expectations of +0.3% m/m and +4.2% y/y.
Dovish Fed comments Friday were bearish for the dollar. Atlanta Fed President Bostic said U.S. employment gains are slowing in an orderly manner, and there is no need to raise interest rates further to ease inflation. Also, Chicago Fed President Goolsbee said we've been getting promising numbers on inflation, and the Fed should start thinking about how long to hold interest rates in restrictive territory.
EUR/USD (^EURUSD) Friday rose by +0.54%. A slump in the dollar Friday sparked short covering in the euro. EUR/USD also found support after German Jun factory orders unexpectedly rose by the most in 3 years, bolstering optimism in Europe’s largest economy.
Eurozone Jun retail sales unexpectedly fell -0.3% m/m, weaker than expectations of +0.2% m/m.
German Jun factory orders unexpectedly rose +7.0% m/m, stronger than expectations of -2.0% m/m and the biggest increase in 3 years.
The German Jul S&P construction PMI fell -0.4 to 41.0, the steepest pace of contraction in 2-1/2 years.
USD/JPY (^USDJPY) on Friday fell by -0.53%. The yen Friday erased overnight gains and turned lower after T-note yields tumbled on a smaller-than-expected increase in U.S. Jul nonfarm payrolls and dovish Fed comments. The yen Friday initially moved lower as Japanese government bond yields fell after the BOJ on Thursday announced an unscheduled debt-purchase operation for the second time this week to push bond yields lower.
October gold (GCV3) Friday closed up +7.2 (+0.37%), and Sep silver (SIU23) closed up +0.019 (+0.08%). Precious metals prices on Friday recovered from early losses and closed slightly higher. Gold and silver recovered from 3-week lows Friday and moved higher after the dollar and T-note yields fell on a smaller-than-expected increase in U.S. Jul nonfarm payrolls. Metals extended their gains after Atlanta Fed President Bostic said there is no need for the Fed to raise interest rates further to ease inflation. On the bearish side, fund liquidation in gold continues after long gold holdings in ETFs fell to a new 3-year low on 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.
