Dollar Rallies to New Highs vs Majors and Gold Back Near Four-Year Low Ahead of PMI Numbers
The US dollar index began the first day of November with a 0.5% jump over the last day of October, pushing gold back near the four-year low of last week while the euro and the yen plunged to new multi-year lows.
The yellow metal rebounded to $1,172 by Friday's close from the four-year low of $1,160 hit earlier in the day but has fallen back to as low as $1,161.50 so far on Monday.
The USD index, the gauge that measures the greenback's strength versus a trade-weighted basket of six major currencies, increased to 86.38, its highest since June 2010.
The EUR/USD slipped to 1.2439, its lowest since August 2012 while the USD/JPY rallied to the 113-mark, its highest since January 2008.
Major Asian stock indices were slightly down on Monday after the sharp rally on Friday, likely on profit booking.
October saw the fourth straight monthly gain of the dollar index as the market prepared for the end of the US Fed's quantitative easing programme, which ended as scheduled in October.
The surprise Bank of Japan move to further stimulate the economy with some fresh accommodative steps boosted stocks and the resulting weakness in the yen aided the dollar rally and subsequent gold decline.
With Japan's markets closed for Culture Day celebrations, South Korea's KOSPI led the decline with a 0.8% drop while Hong Kong's Hang Seng was down 0.25%.
Being the first week of the month, markets will get to see PMI releases from several major economies. The Chinese numbers further revealed the challenges for the demand scenario, adding to the negative sentiment in risk assets.
Among all, the US numbers, manufacturing PMI data by Markit as well as ISM, will attract more attention. Also, the Chicago Fed's Charles Evans and Dallas Fed's Richard Fischer are scheduled to speak at various forums on Monday.
In the background of indications of tighter dollar and cheaper yen going forward, the remarks by the senior Fed officials will be of special importance.
However, there are bigger names: BoJ chief Haruhiko Kuroda, former Fed governor Bernanke, Bank of Canada chief Stephen Poloz and ECB President Mario Draghi are expected to speak during the week.
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