The dollar index (DXY00) today is up by +0.24%. Hawkish comments today from Fed Governor Bowman boosted the dollar when she said she sees a number of upside risks to the inflation outlook, and "we are still not yet at the point where it is appropriate to lower the policy rate." Also, stronger-than-expected US home price and consumer confidence reports were hawkish for Fed policy and bullish for the dollar.
The Conference Board US June consumer confidence index fell -0.9 to 100.4, slightly stronger than expectations of 100.0.
The US Apr S&P CoreLogic composite-20 home price index eased to +7.20% y/y from +7.46% y/y in March, stronger than expectations of +7.00% y/y.
The US June Richmond Fed manufacturing survey fell -10 to -10, weaker than expectations of -3.
The US June Chicago Fed national activity index unexpectedly rose +0.44 to 0.18, stronger than expectations of a decline to -0.25.
Fed Governor Bowman said she sees a number of upside risks to the inflation outlook, and "we are still not yet at the point where it is appropriate to lower the policy rate." She added that she "doesn't see any rate cuts by the Fed this year and shifted her outlook for rate cuts to 2025."
The markets are discounting the chances for a -25 bp rate cut at 10% for the July 30-31 FOMC meeting and 64% for the following meeting on Sep 17-18.
EUR/USD (^EURUSD) today is down by -0.35%. A stronger dollar today is weighing on the euro. The euro is also under pressure after a Bloomberg “poll of polls” shows Marine Le Pen's far-right National Rally party has widened its lead by 0.7 points to 35.4% ahead of the first round of France's snap legislative election on Sunday.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 6% for the July 18 meeting and 66% for the September 12 meeting.
USD/JPY (^USDJPY) today is up by +0.04%. The yen today gave up an early advance and turned lower after hawkish comments from Fed Governor Bowman pushed T-note yields higher. The yen was also under pressure after Japan's May PPI services prices unexpectedly eased and the Japan Apr leading index CI was revised downward, dovish factors for BOJ policy. The yen found some support from today’s rise in the 10-year JGB bond yield to a 1-1/2 week high of 1.006%.
Japan May PPI services prices unexpectedly eased to +2.5% y/y from +2.7% y/y in Apr, weaker than expectations of an increase to +3.0% y/y.
The Japan Apr leading index CI was revised downward to 110.9 from the previously reported 111.6.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 57% for the July 31 meeting and 51% for the September 20 meeting.
August gold (GCQ4) today is down -8.50 (-0.36%), and July silver (SIN24) is down -0.285 (-0.97%). Precious metals today are modestly lower. Today’s stronger dollar is undercutting metals prices. Also, hawkish comments today from Fed Governor Bowman pushed T-note yields higher and weighed on precious metals prices.
Precious metals have underlying support today from increased safe-haven demand from political uncertainty in France after a Bloomberg poll of polls shows Marine Le Pen's far-right National Rally party has widened its lead by 0.7 to 35.4% ahead of the first round of France's snap legislative election on Sunday.
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.
