Dollar Edges Higher with T-Note Yields
The dollar was initially under pressure on Thursday as improved prospects for an EU trade agreement with the US boosted the euro. Also, Thursday's weaker-than-expected US PMI and new home sales reports were bearish for the dollar.
More News from Barchart
As Silver Scores a Nearly 14-Year High, New Records Could Be Just Around the Corner for Precious Metals
Will Metals Stay in the Spotlight Wednesday?
Possible EU-US Trade Deal Weighs on the Dollar
Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else.
US weekly initial unemployment claims unexpectedly fell -4,000 to a 3-month low of 217,000, showing a stronger labor market than expectations of an increase to 226,000.
The US June Chicago Fed national activity index rose +0.06 to -0.10, stronger than expectations of -0.15.
The July S&P US manufacturing PMI fell -3.4 to 49.5, weaker than expectations of 52.7 and the lowest level in 7 months.
US June new home sales rose +0.6% m/m to 627,000, weaker than expectations of +4.3% m/m to 650,000.
Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the July 29-30 FOMC meeting and 63% at the following meeting on September 16-17.
EUR/USD (^EURUSD) Thursday fell by -0.03%. The euro fell from a 2.5-week high Thursday and turned slightly lower on comments from ECB President Lagarde, who said the economic risks to the Eurozone are tilted to the downside and a stronger euro could dampen inflation more than expected.
The euro initially moved higher Thursday on hopes that a trade deal between the EU and US was close. Also, signs of strength in the Eurozone economy boosted the euro after the Eurozone July S&P manufacturing PMI rose to a 3-year high and the July S&P composite PMI rose to an 11-month high. In addition, the euro garnered support Thursday after the ECB kept interest rates unchanged and said the Eurozone economy has so far proven resilient.
The Eurozone July S&P manufacturing PMI rose +0.3 to a 3-year high of 49.8, right on expectations. The Eurozone July S&P composite PMI rose +0.4 to an 11-month high of 51.0, stronger than expectations of +0.1 to 50.7.
Eurozone June new car registrations fell -7.3% y/y to 1.010 million units, the largest decline in 10 months.
The German Aug GfK consumer confidence index unexpectedly fell -1.2 to a 4-month low of -21.5, weaker than expectations of an increase to -19.3.
As expected, the ECB kept the deposit facility rate unchanged at 2.00%. The ECB said, 'Inflation is currently at the 2% medium-term target' and the economy has so far proven resilient, but the environment remains uncertain due to trade disputes.
Swaps are pricing in a 21% chance of a -25 bp rate cut by the ECB at the September 11 policy meeting.
USD/JPY (^USDJPY) Thursday rose by +0.27%. The yen fell from a 2-week high against the dollar today and moved lower after the Nikkei Stock Index rallied to a 1-year high, which reduced the safe-haven demand for the yen. Losses in the yen accelerated Thursday after T-note yields rose.
The yen initially moved higher Thursday on speculation that the BOJ is closer to raising interest rates, following Wednesday's trade agreement between the US and Japan, which removed uncertainty from the market.
The yen continues to be undercut by concerns that the LDP's loss of its majority in Japan's upper house in Sunday's elections may lead to fiscal deterioration in Japan's government finances, as the government boosts spending and implements tax cuts.
Thursday's Japanese economic news was mixed for the yen. The Japan July S&P manufacturing PMI fell -1.3 to 48.8. However, the July S&P services PMI rose +1.8 to a 5-month high of 53.5.
August gold (GCQ25) on Thursday closed down -24.10 (-0.71%), and September silver (SIU25) closed down -0.279 (-0.71%). Precious metals were under pressure on Thursday as the easing of global trade tensions reduced safe-haven demand for the metals. The US and Japan agreed to a trade deal on Wednesday, and Bloomberg reported that the European Union (EU) and the US are progressing toward a trade agreement. Also, Thursday's US weekly initial unemployment claims report showed jobless claims unexpectedly fell to a 3-month low, a sign of US labor market strength that is hawkish for Fed policy and bearish for precious metals. In addition, higher global bond yields and a stronger dollar on Thursday undercut the prices of precious metals. Finally, Thursday's action by the ECB to keep interest rates unchanged, along with its post-meeting statement that the Eurozone economy is proving resilient, was bearish for precious metals.
Precious metals continue to receive safe-haven support from geopolitical risks, including the conflicts in Ukraine and the Middle East. Fund buying of precious metals continues to support prices after gold holdings in ETFs rose to a two-year high on Wednesday, and silver holdings in ETFs reached a three-year high on the same day.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
8 minutes ago
- Yahoo
Shipping industry's tariff-fueled decline won't be 'short-lived'
Container volume at major US ports is falling for a second straight month, raising concerns about weaker consumer demand and higher import costs. John McCown, Center for Maritime Strategy non-resident senior fellow, joins Market Domination to explain how tariffs and shipping fees are putting pressure on trade and inflation. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Well, the 10 largest US ports are on track for a striking year-to-year change in container volume, according to McCollum report. Inbound volume fell nearly 8% in June, marking a second straight month of declines as the impact of tariffs grows. For more on the state of the shipping industry, let's get to Center for Maritime Strategy non-resident senior fellow. That would be John McCollum. John, great to see you on set. Thank you. Good to see you. So, there was this, there was this good piece I was reading in Bloomberg, John, and it was citing, I believe, your very data, sir. Knowing these kind of trends, the number of shipping containers carrying US imports, what, what are the trends, what are the themes we're seeing, John? Well, there are, there are a real downtrend since the beginning of the year. Um, containers are kind of the count of containers are a timely indicator of, of really economic activity, and, in particular, more recently, it's been the tariffs. So, containers were down 7.9%, a rather consistent downtrend, and, and this was in June, a consistent downtrend from the beginning of the year. And unfortunately, I think it's going to get, get worse, you know, as we go forward. And what's unusual about that is container, container volume has consistently grown at usually well above GDP, some years it was growing two or three times GDP. So we're really looking at the first year where we're going to have a year-over-year decline based on my analysis. And we had two-year, two times that occurred before, but they were short-lived right after the financial crisis and during the pandemic. We're now looking at a rather meaningful reduction, and And you, you don't think, John, it'll be as short-lived? I don't. But, you know, all of the indications, most particularly with the news on tariffs the last three or four weeks, they seem to be here to stay in this administration. You know, one way or another, not only the tariffs, but there's something called USTR ship fee program that'll come into place in October, and that's kind of a tax on Chinese operated ships and China built ships. And so that's going to be kind of another form of tariff. Right now, if you look at the value of all the goods coming in over our ports, it's about 2.2 trillion dollars a year. It's about 7 and a half percent of our economy. So a reduction in that volume, you know, first has a commerce effect, an effect on growth. And of course, the volume that continues to come in is going to have a much bigger tax. So it's going to have an inflation effect. I don't know where it's going to kind of land on that spectrum, but it's going to be somewhere that combination of less growth or more inflation. And, and that's going to be the initial impact, and unfortunately, there really just isn't a comfortable place on that spectrum, in my view. And as you see this decline in inbound volume, John, that means what for consumers? Well, for it's really an indication of consumers will be buying less, you know, less imported goods on their retailer shelf. You know, I think the biggest impact for consumers will be the inflation impact, which, which could be fairly material. Can you, are these, are these containers, John, is it, is it, how good a gauge is it of macroeconomic health? Meaning, is there a, is there a relationship between volumes and GDP? Yes, there, there consistently has been. It's kind of a good leading indicator, I think, of economic activity. In the early years, container shipping grew at multiples, but now we're kind of a little bit above GDP. The investor, Warren Buffett, famously said that his most favorite economic indicator is real car loadings. The notion is that, you know, goods are moved before there's commerce related to that. So it's kind of a leading indicator, the Dow theory. I think container volume is really the same thing. Worldwide container volume and, you know, is kind of a measure of worldwide growth, and it's continuing to grow, you know, even with the US declining, not as much because the US is a big part of that. But I think it's, for consumers, I think right now, I would think the inflation impact is the most impact. Also, I guess, with, with less imported goods, there's less choice. There's less, less, less choice in terms of what to buy. I, I, because I spent my career in container shipping, I'm clearly biased. I think tariffs don't make any sense, but I think there's, there's, there's economic underpinning. You know, I think the theory of comparative advantage is a beautiful thing that has, you know, I think the US has benefited immensely by trade, not only has our economy benefited, but it's, it's, it's more, provided more national security. You know, IBM famously had an early saying, you know, world peace through world trade. I really believe that. And so, I think as we're moving away from that sort of open trade, it's going to first hurt our economy, in my view. Secondarily, it's concerning in terms of raising tensions. Trump trade and terrorists, they dominate today, John. They're going to keep dominating. We appreciate your time. Thanks for joining us. Thank you. Related Videos India's Goyal Sees UK Trade Deal as Win-Win Musk Is Biggest Asset for Tesla, Wedbush's Ives Says S&P 500 and Nasdaq Hit New Highs | Closing Bell UnitedHealth, Southwest & American Air, Dow: Trending Tickers Sign in to access your portfolio
Yahoo
8 minutes ago
- Yahoo
S&P 500, Nasdaq Extend Record Run as Wall Street Posts Weekly Gains
The S&P 500 and the Nasdaq Composite gained on Friday, extending their record-setting advance during Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
8 minutes ago
- Yahoo
Rethinking your 60/40 portfolio: Where managed futures fit in
As the S&P 500 (^GSPC) is trading near record highs, Yahoo Finance Markets and Data Editor Jared Blikre, who also hosts Yahoo Finance's Stocks in Translation podcast, compares the historic performances of the index, the traditional 60/40 portfolio, and managed futures in the context of smoothing out your portfolio. Check out Stocks in Translation's coverage of cyclical vs. defensive sectors. Catch more Stocks in Translation here, with new episodes every Tuesday and Thursday. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. Related videos The £70bn pension tax raid Reeves may not be able to resist NS&I 'bucks trend' by launching one-year bonds with higher rates Billionaire Bill Ackman has over 20% of his FTSE 100 fund in this one stock The inheritance tax rule that could cut your bill to £0 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
