The dollar index (DXY00) Thursday fell by -0.70% and posted a 1-week low. The dollar was under pressure Thursday after Wednesday’s post-FOMC meeting comments from Fed Chair Powell bolstered speculation the Fed is done with its rate hiking cycle. Losses in the dollar accelerated on Thursday’s U.S. economic reports that showed weekly initial unemployment claims and Q3 nonfarm productivity rose more than expected, dovish factors for Fed policy.
Thursday’s U.S. economic news was primarily dovish for Fed policy and bearish for the dollar. Weekly initial unemployment claims rose +5,000 to 217,000, showing a slightly weaker labor market than expectations of no change at 210,000. Also, weekly continuing claims rose +35,000 to a 6-month high of 1.818 million, showing a weaker labor market than expectations of 1.800 million. In addition, Q3 nonfarm productivity rose +4.7%, stronger than expectations of +4.3% and the most in 3 years. On the bullish side, Sep factory orders rose +2.8% m/m, stronger than expectations of +2.3% m/m and the biggest increase in 2-3/4 years.
EUR/USD (^EURUSD) on Thursday rose by +0.53%. Weakness in the dollar Thursday was supportive of the euro. EUR/USD also gained after the Eurozone Oct S&P manufacturing PMI was revised upward. Dovish comments from ECB Governing Council member Knot limited gains in the euro when he said he favors pausing ECB rate hikes.
The Eurozone Oct S&P manufacturing PMI was revised upward by +0.1 to 43.1 from the previously reported 43.0.
German Oct unemployment rose +30,000, above expectations of +14,000 and a sign of a weaker labor market. The Oct unemployment rate rose +0.1 to 5.8%, right on expectations and the highest in 2-1/4 years.
Comments from ECB Governing Council member Knot suggest he favors pausing ECB rate hikes when he said, "I see the current level of our policy rate as a good cruising altitude where they can remain for some time."
USD/JPY (^USDJPY) on Thursday fell by -0.33%. The yen on Thursday moved higher for a second day as a sharp decline in T-note yields boosted the yen. The yen also rose after Prime Minister Kishida announced a larger-than-expected 17 trillion-yen stimulus package that aims to boost economic growth. A Reuters report Thursday supported the yen as it said BOJ Governor Ueda plans to gradually exit the BOJ’s ultra-easy monetary policy by sometime next year.
December gold (GCZ3) Thursday closed up +6.00 (+0.30%), and Dec silver (SIZ23) closed up +0.056 (+0.25%). Precious metals prices on Thursday posted moderate gains, supported by a decline in the dollar index to a 1-week low. Also, Thursday’s drop in global bond yields was bullish for precious metals. In addition, precious metals found support on Wednesday’s comments from Fed Chair Powell that bolstered speculation the Fed may be finished with its rate hiking cycle. Silver prices found support on Thursday’s stronger-than-expected U.S. Sep factory orders report, a positive sign for industrial metals demand. Gains in metals were limited as Thursday’s rally in stocks curbed the safe-haven demand for precious metals.
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.
