The dollar index rose 0.27% on Thursday, boosted by better-than-expected US economic reports and hawkish comments from Federal Reserve officials. Weekly initial jobless claims unexpectedly fell to a 10-week low of 208,000, June retail sales rose 0.2% month-over-month as expected, and the Philadelphia Fed business outlook survey for July jumped to a 4.5-year high of 41.4. Kansas City Fed President Jeff Schmid and Dallas Fed President Lorie Logan both said they favored tighter policy to bring down inflation, with Logan stating that modestly higher interest rates would better balance the outlook and risks. The stronger data and hawkish rhetoric pushed Treasury yields higher and weighed on equities, further boosting liquidity demand for the dollar. The euro fell 0.23% against the dollar, while the yen slipped 0.14% despite some safe-haven demand after a 2% drop in the Nikkei. Gold and silver prices tumbled, with gold down 1.47% to a two-week low and silver down 2.17% to a three-week low, as the prospect of tighter Fed policy dampened precious metals.
Hawkish Fed remarks and strong US data raise expectations of tighter policy, strengthening the dollar and pressuring gold prices.
Same monetary tightening outlook dampens precious metals, with silver falling 2.17% to a three-week low.