The dollar index (DXY00) today is up by +0.09% at a 2-week high. The dollar is climbing today on signs of strength in the economy after the Mar S&P Global Services PMI index and Feb Chicago Fed national activity index rose more than expected. Also, higher T-note yields today have strengthened the dollar's interest rate differentials.
Gains in the dollar are limited after the Mar S&P Global manufacturing PMI unexpectedly contracted. Also, today's sharp rally in stocks has curbed liquidity demand for the dollar. In addition, the dollar is under pressure on reports that US reciprocal tariffs scheduled to be imposed on April 2 would be more targeted than widespread tariffs originally threatened, easing inflation concerns that could allow the Fed to keep cutting interest rates.
The US Feb Chicago Fed national activity index unexpectedly rose +0.26 to 0.18, stronger than expectations of a decline to -0.17.
The US Mar S&P Global manufacturing PMI fell -2.9 to 49.8, weaker than expectations of 51.7. However, the Mar S&P Global services PMI rose +3.3 to 54.3, stronger than expectations of no change at 51.0.
The markets are discounting the chances at 16% for a -25 bp rate cut after the May 6-7 FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.07% at a 2-week low. The euro is under pressure today on dovish comments from ECB Executive Board member Cipollone, who said the ECB's case to keep cutting interest rates has strengthened since its last decision earlier this month. Losses in the euro are contained on signs of economic strength after the Eurozone Mar S&P manufacturing PMI rose more than expected to a 2-year high.
The Eurozone Mar S&P manufacturing PMI rose +1.1 to a 2-year high of 48.7, stronger than expectations of 48.2.
Swaps are discounting the chances at 65% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) today is up by +0.63%. The yen today is under pressure and fell to a 3-week low against the dollar on a sign of weakness in the Japanese economy after the Japan Mar Jibun Bank manufacturing PMI contracted at the steepest pace in a year. Also, today's sharp rally in stocks has reduced the safe-haven demand for the yen. Losses in the yen are limited after BOJ Governor Ueda said the BOJ will keep raising interest rates if its economic outlook is realized.
The Japan Mar Jibun Bank manufacturing PMI fell -0.7 to 48.3, the steepest pace of contraction in a year.
BOJ Governor Ueda said the BOJ will adjust its degree of monetary easing if its economic outlook for achieving its price target is realized.
April gold (GCJ25) today is up +6.00 (+0.20%), and May silver (SIK25) is up +0.164 (+0.49%). Precious metals today are moderately higher. Reports that US reciprocal tariffs scheduled for April 2 will be more targeted than previously expected have eased concerns about inflation, which could allow the Fed to keep cutting interest rates, a dovish factor for precious metals demand. Dovish comments today from ECB Executive Board member Cipollone boosted demand for precious metals as a store of value when he said the ECB's case to keep cutting interest rates has strengthened since its last decision earlier this month. Ramped-up geopolitical risks in the Middle East are also boosting safe-haven demand for precious metals as Israel continues 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, fund buying of gold supports prices after long gold positions in ETFs rose to a 17-month high last Friday.
Gains in precious metals are limited today due to higher T-note yields. Also, today's sharp rally in stocks has reduced safe-haven demand for precious metals. In addition, hawkish comments from BOJ Governor Ueda were bearish for precious metals when he said the BOJ will keep raising interest rates if its economic outlook is realized.
