The dollar index (DXY00) on Monday rose +0.257 (+0.27%). The dollar index on Monday posted moderate gains after the 10-year T-note yield rose to a nearly 2-year high. Higher T-note yields strengthen the dollar’s interest rate differentials. Also, hawkish comments from Richmond Fed President Barkin helped push the dollar higher Monday when he said he "certainly" thinks it's conceivable that the Fed will raise interest rates at the March FOMC meeting.
EUR/USD (^EURUSD) on Monday fell -0.0035 (-0.31%). The euro on Monday retreated on strength in the dollar along with divergent central bank policies with the Fed currently tapering QE and expected to raise interest rates well before the ECB. A positive factor for EUR/USD was Monday’s data that showed Eurozone Jan Sentix investor confidence unexpectedly rose +1.4 to 14.9, stronger than expectations of a decline to 13.0.
USD/JPY (^USDJPY) on Monday fell -0.34 (-0.29%). The yen strengthened Monday as a slump in stocks boosted the safe-haven demand for the yen. Forex trading on Monday in USD/JPY was muted, with Japanese markets closed on Monday for a holiday. The upside in the yen was limited after the 10-year T-note yield climbed to a nearly 2-yer high Monday.
Monday’s U.S. economic data was bullish for the dollar. U.S. Nov wholesale trade sales rose +1.3% m/m, stronger than expectations of +1.0% m/m.
Comments on Monday from Richmond Fed President Barkin were bullish for the dollar when he said he "certainly" thinks it's conceivable that the Fed will be able to raise interest rates at the March FOMC meeting.
February gold (GCG22) on Monday closed up +1.40 (+0.08%), and March silver (SIH22) closed up +0.053 (+0.24%). Gold and silver on Monday recovered from early losses and settled slightly higher after a sell-off in stocks boosted the safe-haven demand for precious metals. Dollar strength on Monday initially pressured metals prices. Gold prices were also undercut on soaring global bond yields after the 10-year T-note yield rose to a nearly 2-year high Monday, and the 10-year German bund yield climbed to a 2-1/2 year high.
The dollar and gold have continued safe-haven support from the negative impact of the worldwide spread of the omicron Covid variant on the global economic recovery. The 7-day average of new U.S. Covid infections rose to a record 708,323 on Sunday, up +79% since Jan 1.
