The dollar index reached a 6-week high, rising by +0.36% due to better-than-expected US economic news. Weekly jobless claims fell to a 6-week low, and business outlook surveys exceeded expectations. Atlanta Fed President Bostic’s hawkish comments also boosted the dollar’s gains. President Trump stated he has no plans to fire Fed Chair Powell, adding support to the dollar.
US weekly initial unemployment claims unexpectedly fell to a 6-week low of 198,000, showing a stronger labor market. The Jan Empire manufacturing survey rose +11.4 to 7.7, surpassing expectations. The Jan Philadelphia Fed business outlook survey also rose +21.4 to a four-month high of 12.6, stronger than expected.
EUR/USD fell to a 6-week low, down by -0.36%, as the dollar’s strength weighed on the euro. However, Eurozone Nov industrial production rose +0.7% m/m, beating expectations. Swaps are pricing in a 1% chance of a +25 bp rate hike by the ECB at the next policy meeting on February 5.
USD/JPY is up by +0.11% due to a stronger dollar, while the smallest increase in Japanese producer prices in 20 months signals dovish BOJ policy. Japanese Prime Minister Takaichi’s potential fiscal policy expansion raises concerns, along with China-Japan tensions. Japan’s Dec PPI eased to +2.4% y/y, the smallest pace in 20 months.
COMEX gold and silver prices are down today, with the dollar’s rally to a 6-week high sparking long liquidation pressures. Geopolitical risks in Iran ease, curbing safe-haven demand. Hawkish US economic news and Fed policy outlook weigh on precious metals. Concerns about Fed independence boost demand for gold as a store of value.
Precious metals have ongoing support amid safe-haven demand, Fed policy expectations, and increased liquidity in the financial system. Strong central bank demand for gold and fund demand for precious metals remain supportive of prices. Gold ETF long holdings are at a 3.25-year high, while silver ETF long holdings rose to a 3.5-year high.
Read more at Yahoo Finance: Dollar Rallies on Solid US Economic News