The dollar index (DXY00) today is up by +0.08%. The dollar today recovered from early losses and is modestly higher, just below Wednesday’s 2-year high. Better-than-expected US economic news today supported the dollar. The dollar also has carryover support from Wednesday when the FOMC signaled only 50 bp of interest rate cuts next year, down from a September projection of 100 bp of rate cuts. Strength in stocks today has curbed some liquidity demand for the dollar.
US weekly initial unemployment claims fell -22,000 to 220,000, showing a stronger labor market than expectations of 230,000.
US Q3 GDP was unexpectedly revised upward to 3.1% (q/q annualized), stronger than expectations of no change at 2.8%.
The US Dec Philadelphia Fed business outlook survey unexpectedly fell -10.9 to a 20-month low of -16.4, weaker than expectations of an increase to 2.8.
US Nov leading indicators unexpectedly rose +0.3% m/m, stronger than expectations of a -0.1% m/m decline and the largest increase in 2-3/4 years.
US Nov existing home sales rose +4.8% m/m to an 8-month high of 4.15 million, stronger than expectations of +3.2% to 4.09 million.
The markets are discounting the chances at 9% for a -25 bp rate cut at the January 28-29 FOMC meeting.
EUR/USD (^EURUSD) today is up by +0.41%. The euro is climbing after today’s news showed the German Jan GfK consumer confidence index rose more than expected, a supportive factor for the euro. Also, higher European government bond yields today have strengthened the euro’s interest rate differentials.
Eurozone Nov new car registrations fell -1.9% to 869,816 units.
The German Jan GfK consumer confidence index rose +1.8 to -21.3, stronger than expectations of -22.5.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its next meeting on January 30 and a 12% chance for a -50 bp rate cut at that meeting.
USD/JPY (^USDJPY) today is up by +1.68%. The yen tumbled to a 4-3/4 month low against the dollar today after the BOJ kept interest rates unchanged, and BOJ Governor Ueda signaled the BOJ is in no hurry to raise interest rates. Higher T-note yields today are also weighing on the yen.
As expected, the BOJ kept its overnight call rate unchanged at 0.25%
Comments from BOJ Governor Ueda suggest the BOJ may wait longer before raising interest rate when he said, “The overall picture on wages should be clearer by March or April, and it may take time to assess the full impact of the Trump administration’s policies.”
February gold (GCG25) today is down -43.10 (-1.63%), and March silver (SIH25) is down -1.395 (-4.54%). Precious metals today are sharply lower, with gold falling to a 1-month low and silver dropping to a 3-1/4 month low. Precious metals are sinking today on a negative carryover from Wednesday when the dollar surged to a 2-year high after the FOMC signaled fewer interest rate cuts next year. Also, soaring global bond yields today are undercutting precious metals prices. In addition, today’s stock recovery has curbed safe-haven demand for precious metals.
Precious metals still have safe-haven support from geopolitical risks after the recent collapse of the Syrian government and the escalation of hostilities in the Ukraine-Russia conflict. Silver prices also found support today after US Q3 GDP was revised upward, a supportive factor for industrial metals demand.
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