The dollar index (DXY00) on Tuesday fell by -0.54%. The dollar on Tuesday gave up an overnight advance and retreated after weaker-than-expected U.S. economic news on July JOLTS job openings and Aug consumer confidence knocked bond yields lower and may prompt the Fed to pause its rate-hiking campaign. Also, Tuesday’s rally in the S&P 500 to a 2-week high reduced liquidity demand for the dollar.
U.S. economic news Tuesday mainly was dovish for Fed policy and bearish for the dollar. The Jul JOLTS job openings fell -338,000 to a nearly 2-1/2 year low of 8.827 million, weaker than expectations of 9.500 million. Also, the Conference Board U.S. Aug consumer confidence index fell -7.9 to 106.1, weaker than expectations of 116.0. Conversely, the Jun S&P CoreLogic composite-20 home price index rose +0.92% m/m and fell -1.17% y/y, stronger than expectations of +0.80% m/m and -1.60% y/y.
EUR/USD (^EURUSD) on Tuesday rose by +0.65% and posted a 1-week high. The euro on Tuesday recovered from early losses and moved higher as weakness in the dollar sparked short covering in the euro. EUR/USD Tuesday initially moved lower after a gauge of German consumer confidence fell to a 4-month low.
The German Sep GfK consumer confidence index fell -0.9 to a 4-month low of -25.5, weaker than expectations of -24.5.
USD/JPY (^USDJPY) on Tuesday fell by -0.58%. The yen on Tuesday recovered from a 9-1/2 month low against the dollar and moved higher after T-note yields tumbled, which sparked short covering in the yen. The yen initially dropped to a 9-1/2 month low after Tuesday’s economic news showed that Japan's July jobless rate unexpectedly rose to a 4-month high, which is dovish for BOJ policy.
The Japan Jul jobless rate rose +0.2 to a 4-month high of 2.7%, showing a weaker labor market than expectations of no change at 2.5%.
October gold (GCV3) Tuesday closed up +18.2 (+0.94%), and Sep silver (SIU23) closed up +0.536 (+2.21%). Precious metals prices Tuesday posted moderate gains, with gold climbing to a 3-week high and silver climbing to a 4-week high. A weaker dollar on Tuesday was supportive for precious metals. Also, a decline in global bond yields Tuesday was bullish for metals prices. In addition, metals found support on Tuesday’s weaker-than-expected U.S. economic news on July JOLTS job openings and August consumer confidence, which may prompt the Fed to pause its rate-hiking campaign. On the negative side is the continued liquidation of gold holdings by funds after long gold holdings in ETFs fell to a 3-1/3 year low Monday.
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.
