Dollar Climbs On Strong T-Note Yields And Hawkish Fed Comments
The dollar index (DXY00) on Friday rose +0.239 (+0.26%). EUR/USD (^EURUSD) fell -0.0024 (-0.20%). USD/JPY (^USDJPY) rose +0.45 (+0.41%). The dollar index on Friday moved moderately higher. A jump in T-note yields on Friday was supportive for the dollar after the 10-year T-note yield rose to a 2-1/2 month high of 1.465%. Hawkish comments on Friday from Kansas City Fed President George and Cleveland Fed President Mester were also bullish for the dollar.
EUR/USD (^EURUSD) on Friday posted moderate losses. The euro moved lower Friday on dollar strength along with weakness in German business confidence after the German Sep IFO business climate fell -0.8 to a 5-month low of 98.8, weaker than expectations of 99.0.
USD/JPY (^USDJPY) on Friday moved higher for the third day and posted a 6-week high. The yen was under pressure the entire day Friday from higher T-note yields after the 10-year T-note yield rose to a 2-1/2 month high of 1.465%. The yen was also under pressure Friday on weak Japanese economic data after the Japan Sep Jibun Bank manufacturing PMI fell -1.5 to 51.2, the slowest pace of expansion in 8 months.
Friday’s U.S. economic data was bullish for the dollar after U.S. Aug new home sales rose +1.5% m/m to a 4-month high of 740,000, stronger than expectations of 715,000.
Hawkish Fed comments on Friday were supportive of the dollar. Kansas City Fed President George said, "In my view, the criteria for substantial further progress has been met," and moving sooner rather than later on taper is appropriate. Also, Cleveland Fed President Mester said upside risks to inflation outweigh downside risks, and she supports tapering asset purchases in November.
December gold (GCZ21) on Friday closed up +1.90 (+0.11%), and Dec silver (SIZ21) closed down -0.254 (-1.12%). Precious metals on Friday settled mixed. A stronger dollar Friday undercut precious metals prices. Gold rose Friday on concern about fallout from the debt crisis of China Evergrande Group, which boosted safe-haven demand for gold. Gains in gold were limited from higher T-note yields after the 10-year T-note yield climbed to a 2-1/2 month high Friday of 1.465%.
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. However, the pandemic in the U.S. has improved after the 7-day average of new U.S. Covid infections fell to 126,169 on Thursday, a 6-week low.
Dollar Climbs On Strong T-Note Yields And Hawkish Fed Comments (barchart.com)
