SIZ21

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The dollar index (DXY00) on Wednesday fell mildly by -0.147 (-0.16%). The main bearish factor was Wednesday’s sharp decline in U.S. T-note yields, which reduces the dollar’s interest rate differentials. The 10-year T-note yield on Wednesday fell by -7 bp to a 2-week low of 1.54%. T-note yields fell on a -2 bp decline in the 10-year breakeven inflation expectations rate and on long liquidation pressure as next week’s expected QE tapering by the Fed seems to already be baked into the market. The dollar saw some support from Wednesday’s better-than-expected U.S. durable goods orders report. U.S. Sep durable goods orders fell by only -0.4% m/m, which was better than expectations for a -1.1% decline. Sep durable orders ex-transportation rose +0.4%, which was in line with market expectations. Sep core capital goods orders (ex defense and aircraft) rose +0.8% m/m, which was better than expectations of +0.5% and was a positive sign for capital spending. EUR/USD (^EURUSD) rose by +0.07%. The ECB at its meeting on Thursday is expected to leave its policy unchanged but may provide indications it is willing to extend the part of its QE program that expires early next year. USD/JPY (^USDJPY) fell -0.31%. December gold (GCZ21) on Wednesday closed +5.40 (+0.30%), and Dec silver (SIZ21) closed +0.103 (+0.43%). Precious metals saw support from the mildly weaker dollar, lower T-note yields, and some increased safe-haven demand after crypto assets fell sharply. The dollar and gold have continued safe-haven support from concern the worldwide spread of the delta Covid variant will crimp the global economic recovery. However, the pandemic in the U.S. has improved after the 7-day average of new U.S. Covid infections on Tuesday fell to a 3-month low of 68,274.