The dollar index (DXY00) Friday rose by +0.21% and posted a 2-week high. The weakness in stocks Friday boosted liquidity demand for the dollar. Hawkish comments Friday from New York Fed President Williams and Chicago Fed President Goolsbee were also positive for the dollar when they signaled their support for steady Fed policy.
New York Fed President Williams said, "The current modestly restrictive stance of the Fed's monetary policy is entirely appropriate given the solid labor market and inflation still running somewhat above our 2% goal."
Chicago Fed President Goolsbee signaled he favors steady Fed policy when he said there's a lot of strength in the hard economic data and the Fed needs to be a steady hand and take the long view.
The markets are discounting the chances at 18% for a -25 bp rate cut after the May 6-7 FOMC meeting.
EUR/USD (^EURUSD) Friday fell by -0.30% and posted a 2-week low. The euro retreated on Friday due to a stronger dollar and dovish comments from ECB Governing Council member Stournaras, who said, "Everything points in the direction of an ECB rate cut in April." Also, concerns about US trade tariffs and their possible negative effects on the Eurozone economy are undercutting the euro. Losses in the euro accelerated on Friday after the Eurozone Mar consumer confidence index unexpectedly declined.
The Eurozone Mar consumer confidence index unexpectedly fell -0.9 to -14.5, weaker than expectations of an increase to -13.0.
ECB Governing Council member Stournaras said, "Everything points in the direction of an ECB rate cut in April," although it's too early to say for certain that such a move will happen.
Swaps are discounting the chances at 59% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) Friday rose by +0.30%. On Friday, the yen gave up overnight gains and turned lower on concerns that US tariffs will derail the global economy and keep the BOJ from raising interest rates. Also, the rebound in T-note yields Friday to higher from lower on the day weighed on the yen. The yen initially moved higher Friday after Japan's Feb national CPI rose more than expected, a hawkish factor for BOJ policy.
Japan's Feb national CPI rose +3.7% y/y, stronger than expectations of +3.5% y/y. Feb national CPI ex-fresh food and energy rose +2.6% y/y, right on expectations and the strongest pace of increase in 11 months.
April gold (GCJ25) Friday closed down -22.40 (-0.74%), and May silver (SIK25) closed down -0.505 (-1.49%). Precious metals on Friday retreated, with silver falling to a 1-1/2 week low. Friday's rally in the dollar index to a 2-week high and higher T-note yields sparked long liquidation in precious metals. Also, hawkish comments Friday from New York Fed President Williams and Chicago Fed President Goolsbee undercut precious metals when they signaled their support for steady Fed policy. Silver prices were under pressure on concerns that US trade policies would undercut economic growth, reducing demand for industrial metals.
Concerns about the potential impacts of US tariffs on global economic growth continue to support the safe-haven demand for precious metals. Ramped-up geopolitical risks in the Middle East are also boosting safe-haven demand for precious metals after Israel this week launched a series of airstrikes across Gaza, ending a two-month ceasefire with Hamas, and as the US continues to launch strikes on Yemen's Houthi rebels. In addition, Friday's stock weakness has increased safe-haven demand for precious metals.
