Dollar Gains On Liquidity Demand As Stocks Plunge
The dollar index (DXY00) on Monday rose +0.089 (+0.10%). EUR/USD (^EURUSD) fell -0.0001 (-0.01%). USD/JPY (^USDJPY) fell -0.57 (-0.57%). The dollar index on Monday rallied to a 4-week high. A sell-off in global stocks on Monday boosted the liquidity demand for the dollar. Gains in the dollar were limited by lower T-note yields.
EUR/USD (^EURUSD) on Monday fell to a 4-week low but finished the day little changed. Dollar strength on Monday undercut EUR/USD along with dovish comments from ECB Executive Board member Schnabel, who said the ECB "is still more concerned about inflation being too low rather than too high." The euro recovered most of its losses on rising producer prices in Germany, which is hawkish for ECB policy. German Aug PPI rose +1.5% m/m and +12.0% y/y, stronger than expectations of +0.8% m/m and +11.1% y/y, with the +12.0% y/y gain being the largest since the data series began in 1977.
USD/JPY (^USDJPY) on Monday fell moderately. The yen moved higher Monday as a slide in global equity markets boosted the safe-haven demand for the yen. Also, a sharp decline in T-note yields on Monday undercut the dollar versus the yen.
Monday’s U.S. economic data was bullish for the dollar. The Sep NAHB housing market index unexpectedly rose +1 to 76, stronger than expectations for a decline to 74 and the first increase in 5 months.
December gold (GCZ21) on Monday closed up +12.40 (+0.71%), and Dec silver (SIZ21) closed down -0.133 (-0.60%). Precious metals on Monday settled mixed. Gold prices recovered from a 5-week low Monday and settled moderately higher as a slump in stocks fueled safe-haven demand for gold. Lower global bond yields on Monday were also bullish for gold. Silver prices sank to a 9-1/2 month low on a rally in the dollar index to a 4-week high along with a slump in commodity prices on concern that contagion from China’s property debt crisis will undercut its economic growth and demand for commodities.
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 7-day average of new U.S. Covid infections rose to a 7-3/4 month high last Monday of 171,850.
Dollar Gains On Liquidity Demand As Stocks Plunge (barchart.com)
