News on Inflation Impacting Global Markets: Dollar Weakens, Eurozone Falters, and Precious Metals Dive
Global Market Reactions to News on Inflation: Dollar’s Slide and Eurozone’s Struggles
According to barchart.com, the dollar index (DXY00) fell slightly on Friday due to lower bond yields and dovish U.S. news on inflation, partially recovering after New York Fed President Williams suggested the need for continued restrictive monetary policy. Weaker-than-expected U.S. economic data, including August personal spending and September MNI Chicago PMI, contributed to the dollar’s losses.
The dollar also faced headwinds as the August PCE core deflator showed the slowest increase in two years, further highlighting concerns about news on inflation. However, the University of Michigan U.S. consumer sentiment was revised upward. EUR/USD (^EURUSD) posted a modest gain, supported by the weaker dollar, although gains were limited by Eurozone consumer price data and German retail sales figures that fell short of expectations.
Dovish comments from ECB Governing Council member Kazaks further influenced the euro. Eurozone September CPI eased, as did the Sep core CPI, while German August retail sales unexpectedly declined significantly, adding to concerns about news on inflation.
Market Volatility and Precious Metals React to News on Inflation
USD/JPY (^USDJPY) saw a slight rise, with the yen initially gaining but then posting modest losses as the Bank of Japan (BOJ) announced an unscheduled bond-purchase operation to curb long-term bond yield increases. Japanese economic data provided mixed signals, with industrial production surprising to the upside but consumer confidence falling to a six-month low and retail sales coming in weaker than expected.
Precious metals, including gold and silver, experienced moderate losses on Friday, with gold reaching a 6-1/2 month low and silver touching a 6-1/4 month low. These losses were driven by hawkish comments from New York Fed President Williams, who emphasized the need for continued restrictive interest rates, raising concerns about news on inflation.
Additionally, concerns about industrial metals demand arose due to disappointing economic data, such as the U.S. Sep MNI Chicago PMI and German Aug retail sales. However, the precious metals received some support from a weaker dollar and lower global bond yields amid ongoing concerns about news on inflation.