The dollar index (DXY00) today is down by -0.09%. The dollar today gave up an early advance and turned lower on economic concerns after the Apr Dallas Fed manufacturing survey of general business activity index fell more than expected to a 5-year low. The dollar is also under pressure on concerns that the US-China trade war could drag on and weigh on US growth prospects after President Trump said the US would not lower tariffs on China unless “they give us something substantial.”
The dollar today initially moved higher on comments from US Treasury Secretary Bessent, who said the US is working on bilateral trade deals with 17 key trading partners, not including China. Higher T-note yields today are also supportive of the dollar.
The US Apr Dallas Fed manufacturing survey of general business activity index fell -19.5 points to a 5-year low of -35.8, weaker than expectations of -17.0.
The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting, down from a 30% chance last week.
EUR/USD (^EURUSD) today is up by +0.11%. The euro today recovered from early losses and moved higher after the dollar weakened. The euro today initially moved lower on some dovish ECB comments. ECB Governing Council member Villeroy de Galhau said the ECB has room to cut interest rates, and ECB Governing Council member Rehn said he sees downside risks in the ECB’s March inflation forecasts.
ECB Governing Council member Villeroy de Galhau said the ECB has room to lower interest rates as the trade war triggered by US tariffs will weigh on the global economy but won’t affect the inflation trend in Europe.
ECB Governing Council member Rehn said that due to the fallout from US tariffs, “I find it reasonable to assume that there are downside risks to the inflation outlook in the ECB’s March projections.”
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
USD/JPY (^USDJPY) today is down by -0.60%. The yen today is moderately higher on short covering ahead of Thursday’s BOJ policy meeting. Higher T-note yields today are limiting gains in the yen. Also, today’s rally in the Nikkei Stock Index to a 4-week high reduced safe-haven demand for the yen. In addition, today’s statement from the BOJ that it will purchase government bonds in May at the same pace as April was bearish for the yen as it damped speculation the BOJ, in a hawkish move, would cut its bond purchases.
June gold (GCM25) today is up +9.60 (+0.29%), and May silver (SIK25) is down -0.230 (-0.70%). Precious metals prices today are mixed. Today’s weaker dollar is supportive of precious metals prices. Gold is also climbing today on dovish comments from ECB Governing Council member Villeroy de Galhau, who said the ECB has room to lower interest rates. Concern the US-China trade war will persist and undercut global economic growth is boosting safe-haven demand for gold and undercutting silver after President Trump said the US would not lower tariffs on China unless “they give us something substantial.” Geopolitical risks in the Middle East are boosting safe-haven demand for precious metals as the Israel-Hamas and the US-Houthi conflicts continue. Higher global bond yields today are negative for precious metals.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
