The dollar index (DXY00) on Friday rose +0.371 (+0.39%). The dollar index on Friday rallied moderately on support from higher T-note yields. Also, a slump in stocks Friday boosted the liquidity demand for the dollar. Gains the dollar were limited on weaker-than-expected U.S. economic data on Dec retail sales, Dec manufacturing production, and University of Michigan U.S. Jan consumer sentiment.
EUR/USD (^EURUSD) on Friday fell -0.0038 (-0.33%). EUR/USD was under pressure Friday from dollar strength, along with concerns that rising Covid infections in Europe will lead to pandemic restrictions that undercut economic growth after Germany reported a record 92,223 new Covid infections Friday. EUR/USD remained lower on dovish comments from ECB Executive Board member Schnabel who said, “We must not raise interest rates too soon because that could lead to the economic upswing being stalled.”
USD/JPY (^USDJPY) on Friday fell -0.06 (-0.05%). USD/JPY on Friday dropped to a 3-1/2 week low as a -1.28% decline in the Nikkei Stock Index boosted safe-haven demand for the yen. The yen also rose Friday on a report from Reuters that said the BOJ might decide to raise interest rates even before Japan reaches the central bank’s 2% price target.
U.S. economic data Friday was bearish for the dollar. U.S. Dec retail sales fell -1.9% m/m and -2.3% m/m ex-autos, weaker than expectations of -0.1% m/m and +0.1% ex-autos m/m and the biggest decline in 10 months. Also, Dec manufacturing production unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m. In addition, the University of Michigan U.S. Jan consumer sentiment fell -1.8 to 68.8. weaker than expectations of 70.0.
February gold (GCG22) on Friday closed down -4.90 (-0.27%), and March silver (SIH22) closed down -0.244 (-1.05%). Precious metals on Friday moved lower on a stronger dollar. Gold prices also fell back on higher T-note yields. Silver prices were weighed down from Friday’s weaker-than-expected U.S. economic data on Dec manufacturing that signals reduced demand for industrial metals.
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 796,332 on Thursday. Germany reported a record 92,223 new Covid infections Friday.
