Dollar Slips On Lower T-Note Yields And Strength In EUR/USD
The dollar index (DXY00) on Thursday fell -0.159 (-0.17%). EUR/USD (^EURUSD) rose +0.0012 (+0.10%). USD/JPY (^USDJPY) fell -0.53 (-0.48%). The dollar weakened Thursday on lower T-note yields and from strength in the euro after the ECB raised its 2021 Eurozone GDP forecast and said it would lower the pace of its asset purchases.
EUR/USD (^EURUSD) on Thursday posted modest gains after the ECB said it would conduct bond purchases at a "moderately lower pace" than the 80 billion euros of monthly bond purchases deployed over the past two quarters. EUR/USD also gained after the ECB raised its 2021 Eurozone GDP estimate to 5.0% from 4.6% and raised its 2021 Eurozone inflation forecast to 2.2% from 1.9%.
USD/JPY (^USDJPY) on Thursday fell moderately as lower T-note yields boosted the yen. USD/JPY also moved lower Thursday on signs of strength in Japan’s economy after Japan Aug machine tool orders rose +86.2% y/y, the tenth consecutive monthly increase.
December gold (GCZ21) on Thursday closed up +6.50 (+0.36%), and Dec silver (SIZ21) closed up +0.121 (+0.50%). A weaker dollar on Thursday and lower global bond yields supported gains in precious metals prices. Gold also found support Thursday after the ECB raised its 2021 Eurozone inflation forecast to 2.2% from 1.9%, which is positive for gold demand as a hedge against inflation. Gains in gold were limited after the ECB said it would slow the pace of its asset purchases.
Thursday’s weekly U.S. jobless claims data was bullish for the dollar. U.S. weekly initial unemployment claims fell -35,000 to a 17-1/2 month low of 310,000, showing a stronger labor market than expectations of 335,000.
Comments on Thursday from Atlanta Fed President Bostic were bearish for the dollar when he said: "recent weak data has likely pushed back the start" for tapering asset purchases.
The dollar and gold have continued safe-haven support from concern the worldwide spread of the delta Covid variant will crimp the global economic recovery. The Japanese government on Wednesday said it would extend the Covid state of emergency in Tokyo, Osaka, and 17 other prefectures until Sep 30.
Dollar Slips On Lower T-Note Yields And Strength In EUR/USD (barchart.com)
