The dollar index (DXY00) on Tuesday rose by +0.49%. The dollar on Tuesday recovered from a 1-week low and is moderately higher. Weakness in stocks on Tuesday boosted the liquidity demand for the dollar. The dollar Tuesday initially posted moderate losses after T-note yields fell and on signs of reduced dollar demand. The central banks of the BOE, ECB, BOJ, and Fed announced in a joint announcement that the frequency of 7-day U.S. dollar liquidity-providing operations will revert from daily to once per week beginning May 1. Central banks unveiled daily dollar operations last month to boost dollar liquidity after the run on Silicon Valley Bank and other lending institutions.
Tuesday’s U.S. economic news was mixed for the dollar. On the bullish side, Feb S&P CoreLogic composite-20 home price index unexpectedly rose +0.36% y/y versus expectations for a -0.05% y/y decline. Also, Mar new home sales unexpectedly rose +9.6% m/m to a 1-year high of 683,000, stronger than expectations of a decline to 632,000.
On the bearish side, the Conference Board U.S. Apr consumer confidence index fell -2.7 to a 9-month low of 101.3, weaker than expectations of 104.0. Also, the Apr Richmond Fed manufacturing survey fell -5 to -10, weaker than expectations of -8.
EUR/USD (^EURUSD) on Tuesday fell by -0.65%. The euro Tuesday fell back from a 1-week high and posted moderate losses. Strength in the dollar Tuesday sparked long liquidation in the euro. EUR/USD Tuesday initially rallied to a 1-week high on hawkish comments from ECB Chief Economist Lane, who said, "The current data are indicating that the ECB should raise interest rates again" next week.
USD/JPY (^USDJPY) on Tuesday fell by -0.47%. The yen Tuesday rallied to a 1-week high against the dollar. A fall in the 10-year T-note yield to a 1-1/2 week low Tuesday was bullish for the yen. Also, a jump in Japanese government bond yields gave the yen a boost after the 10-year JGB bond yield rose to a 6-week high Tuesday at 0.491%.
Japan Mar PPI services prices eased to +1.6% y/y from +1.7% y/y in Feb, weaker than expectations of +1.7% y/y.
June gold (GCM3) on Tuesday closed up +4.70 (+0.24%), and May silver (SIK23) closed down -0.429 (-1.69%). Precious metals Tuesday settled mixed, with silver tumbling to a 3-week low. A stronger dollar Tuesday was bearish for metals prices. However, gold prices recovered from early losses Tuesday and moved higher after stocks sold off, which boosted the safe-haven demand for gold. Also, lower global bond yields today supported gold prices.
Silver retreated Tuesday on negative carryover from a slump in iron ore prices to a 4-3/4 month low and a drop in copper prices to a 3-week low. Also, concern about a slowdown in China’s industrial metals demand weighed on silver prices after China’s Iron and Steel Association reported Tuesday that inventory levels at Chinese steel mills rose +1.2% to 18.5 MMT in mid-April compared with early April.
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.
