The dollar index (DXY00) Monday fell by -0.33%. Economic concerns weighed on the dollar after Monday's news that Feb US retail sales rose less than expected, and the Mar Empire manufacturing survey of general business conditions index fell to a 14-month low. The dollar was under continued pressure because of tariff and trade war concerns. The dollar extended its losses on Monday after the Mar NAHB housing market index unexpectedly fell to a 7-month low.
US Feb retail sales rose +0.2% m/m, weaker than expectations of +0.6% m/m, although Feb retail sales ex-autos rose +0.3% m/m, right on expectations.
The US Mar Empire manufacturing survey of general business conditions fell -25.7 to a 14-month low of -20.0, weaker than expectations of -1.9.
The US Mar NAHB housing market index unexpectedly fell -3 to a 7-month low of 39, weaker than expectations of no change at 42.
The markets are discounting the chances at 1% for a -25 bp rate cut at the Tue-Wed FOMC meeting.
EUR/USD (^EURUSD) Monday rose by +0.40%. The dollar's weakness on Monday supported gains in the euro. Gains in the euro were limited after German bund yields fell due to dovish comments from ECB Vice President Guido, who said service inflation is moderating and moving toward lower levels. The euro also had carryover support from last Friday when German chancellor-in-waiting Merz reached an agreement with the Green party on a fiscal reform package for large investments in infrastructure and defense.
Swaps are discounting the chances at 55% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) Monday rose by +0.35%. The yen on Monday fell to a 1-week low against the dollar on political uncertainty in Japan. Support for Japanese Prime Minister Ishiba has plunged after he admitted to handing out shopping vouchers worth hundreds of dollars to newly-selected lawmakers, which increases the chances he could be replaced in summer elections.
April gold (GCJ25) Monday closed up +5.40 (+0.17%), and May silver (SIK25) closed down -0.125 (-0.36%). Precious metals on Monday settled mixed. Metals prices found support Monday from a weaker dollar and lower global government bond yields. Also, safe-haven demand for precious metals rose on heightened geopolitical risks after the US launched weekend strikes on Yemen's Houthi rebels. In addition, the ongoing trade war has boosted the safe-haven demand for precious metals. Fund buying of gold supports prices after long gold positions in ETFs rose to a 17-month high last Friday.
Gains in precious metals on Monday were limited on reduced safe-haven demand as US political risks eased after Congress late last Friday approved a 6-month continuing resolution to fund the government for six months. Silver prices were also under pressure from Monday's weaker-than-expected US economic news on Feb retail sales, the Mar Empire manufacturing survey of general business conditions, and the Mar NAHB housing market index, which were negative for industrial metals demand.
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. For more information please view the Barchart Disclosure Policy here.
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