The dollar index (DXY00) this morning is down by -0.21%. The dollar this morning gave up an early advance and fell to a 1-week low on weaker-than-expected economic news on Jan factory orders and Feb ISM services. Also, lower bond yields are weighing on the dollar, as the 10-year T-note yield fell to a 3-week low. The dollar today initially posted modest gains as weakness in stocks spurred some liquidity demand for the dollar.
U.S. Jan factory orders fell -3.6% m/m, weaker than expectations of -2.9% m/m and the biggest decline in 3-3/4 years.
The U.S. Feb ISM services index fell -0.8 to 52.6, weaker than expectations of 53.0.
The markets are discounting the chances for a -25 bp rate cut at 2% for the March 19-20 FOMC meeting and 21% for the following meeting on April 30-May 1.
EUR/USD (^EURUSD) this morning is up by +0.11%. The euro today erased early losses and climbed to a 1-week high on dollar weakness. Also, an upward revision to the Eurozone Feb S&P composite PMI supports the euro. The euro today initially moved lower on declining European government bond yields after the 10-year German bund yield fell to a 2-1/2 week low.
The Eurozone Feb S&P composite PMI was revised upward by +0.3 to an 8-month high of 49.2 from the previously reported 48.9.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 3% for its next meeting on March 7 and 20% for the following meeting on April 113
USD/JPY (^USDJPY) this morning is down by -0.40%. The yen is climbing today after Japan’s Tokyo Feb CPI rose more than expected, boosting expectations for the BOJ to end negative interest rates. Also, an upward revision to the Japan Feb Jibun Bank services PMI supports the yen. Today’s decline in T-note yields today also benefits the yen.
The Japan Feb Jibun Bank services PMI was revised upward by +0.4 to 52.9 from the previously reported 52.5.
Japan's Feb Tokyo CPI rose +2.6% y/y, stronger than expectations of +2.5% y/y. However, the Feb Tokyo CPI ex-fresh food and energy eased to +3.1% y/y from +3.3% y/y in Jan, right on expectations and the slowest pace of increase in a year.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 43% for its next meeting on March 19 and 73% for the following meeting on April 26.
April gold (GCJ4) this morning is up +17.0 (+0.80%), and May silver (SIK24) is up +0.299 (+1.25%). Precious metals this morning are moderately higher, with gold posting a 3-month high and silver posting a 2-month high. A slump in the dollar today to a 1-week low is bullish for metals. Also, stock weakness today has boosted some safe-haven buying of precious metals. In addition, lower global bond yields today are bullish for precious metals. Finally, heightened geopolitical risks in the Middle East have underpinned safe-haven demand for precious metals. Silver garnered support from
On the negative side, funds continue to liquidate their long gold positions after long gold holdings in ETFs fell to a 4-year low on Monday.
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.
