The dollar index (DXY00) on Wednesday fell -0.133 (-0.14%). EUR/USD (^EURUSD) rose +0.0026 (+0.22%). USD/JPY (^USDJPY) rose +0.16 (+0.15%). The dollar index on Wednesday fell to a fresh 1-1/2 week low. The dollar on Wednesday initially opened higher on strength in T-note yields but gave up its advance and turned lower on dovish comments from Fed Chair Powell. The dollar was also under pressure from concern that the worsening of the pandemic in the U.S will lead to tighter restrictions that curb economic growth. EUR/USD (^EURUSD) on Wednesday rose moderately. Signs of increase price pressures in the Eurozone are hawkish for ECB policy and positive for the euro after the German Jun import price index rose +12.9% y/y, stronger than expectations of +12.6% y/y and the biggest increase in 39-1/2 years. Gains in EUR/USD were limited after the German Aug GfK consumer confidence was unchanged at -0.3, weaker than expectations of an increase to 1.0. USD/JPY (^USDJPY) on Wednesday moved higher as strength in T-note yields on Wednesday boosted the dollar versus the yen. The 10-year T-note yield on Wednesday rose +0.8 bp to 1,249%. The Fed’s post-FOMC statement was bullish for the dollar and negative for gold prices as it said the labor market and inflation "have made progress" toward conditions for the Fed to begin tapering asset purchases and "the FOMC will continue to assess progress in coming meetings. "Comments on Wednesday from Fed Chair Powell signal the Fed is not close to tapering QE and were negative for the dollar when he said, "we are some ways away from substantial progress on jobs" and that inflation in the medium term is likely to move back down .August gold (GCQ21) on Wednesday closed down -0.10 (-0.01%), and Sep silver (SIU21) closed up +0.228 (+0.92%). A decline in the dollar index to a 1-1/2 week low Wednesday was supportive for metals prices. Gold prices were little changed on higher T-note yields. Silver prices garnered support Wednesday on optimism that passage of a U.S. infrastructure package will boost industrial metals demand after a bipartisan group of Senators reached a tentative agreement on a half-trillion-dollar infrastructure package. The dollar and gold still have safe-haven support from concern the worldwide spread of the delta Covid variant will crimp the global economic recovery. On Wednesday, Tokyo reported a record of over 3,000 new Covid infections, Thailand reported a record 16,533 new infections, and South Korea reported a record 1,896 new Covid infections. Also, the 7-day average of new U.S. Covid infections rose to a 3-month high Tuesday of 61,298. In addition, Sydney extended its month-long lockdown for another four weeks. Dollar Slides To A New 1-1/2 Week Low On Dovish Comments From Fed Chair Powell (barchart.com)
