The dollar index (DXY00) Tuesday fell -0.21%, while EUR/USD (^EURUSD) rose +0.43% on hawkish comments by ECB President Lagarde. USD/JPY (^USDJPY) rose +0.37%.
Tuesday’s May U.S. durable goods orders report of +1.7% m/m was stronger than expectations of -0.9%. Also, capital goods orders ex-defense and ex-aircraft, a proxy for corporate capital investment, rose +0.7% m/m, stronger than expectations of +0.1% m/m.
The Conference Board’s June U.S. consumer confidence index rose by +5.7 points to a 1-1/2 year high of 109.7, much stronger than expectations for an increase to 104.0.
The May U.S. new home sales report of +12.2% to a 1-1/4 year high of 763,000 was much stronger than market expectations for a small decline to 675,000.
The Richmond Fed manufacturing index rose by 8 points to -7 from May’s -15, which was stronger than expectations for an increase to -12.
The April S&P CoreLogic home price report of +0.9% m/m and -1.7% y/y was stronger than market expectations of +0.4% m/m and -2.4% y/y. The report highlighted that strong demand for tight home supply continues to put upward pressure on home prices.
At the ECB’s retreat in Portugal, ECB President Lagarde Tuesday said, “It is unlikely that in the near future the central bank will be able to state with full confidence that peak rates have been reached. Barring a material change to the outlook, we will continue to increase rates in July.” The consensus is that the ECB will raise its deposit rate by +25 bp to 3.75% at its next meeting on July 27 and that one final +25 bp rate hike to a terminal rate of 4.0% is likely by late this year.
August gold (GCQ3) Tuesday closed down -10.00 (-0.52%), and July silver (SIN23) closed up +0.134 (+0.59%). Gold was being undercut by Tuesday’s hawkish U.S. economic reports and a +4 bp rise in the 10-year T-note yield. Gold prices saw some underlying support from Tuesday’s mild decline in the dollar index. Silver gained support from Tuesday’s strong U.S. economic reports, which were positive for industrial metal demand.
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.
