The dollar index (DXY00) today is up by +0.27%. The dollar is climbing today ahead of the results of the FOMC meeting later today when the Fed is expected to leave interest rates steady. The dollar also has carryover support from Tuesday when President Trump said he was considering tariffs on everything from steel and copper to semiconductor chips and wanted universal tariffs at “much bigger” than 2.5%. Lower T-note yields today are limiting the upside in the dollar.
The markets are discounting the chances at 1% for a -25 bp rate cut at the conclusion of today’s FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.20%. The euro is under pressure today from Eurozone economic news that showed Eurozone money supply rose less than expected and German Jan GfK consumer confidence declined. The euro is also weighed down by expectations that the ECB will cut interest rates by -25 bp at Thursday’s policy meeting.
Eurozone Dec M3 money supply rose +3.5% y/y, weaker than expectations of 3.9% y/y.
The German Feb GfK consumer confidence index fell -1.0 to -22.4.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at Thursday’s policy meeting.
USD/JPY (^USDJPY) today is down by -0.24%. The yen today is moderately higher against the dollar on the hawkish minutes of the December BOJ meeting when policymakers agreed to raise the policy interest rate if the economic outlook is realized. Also, lower T-note yields today are supportive of the yen. Gains in the yen are limited after the Japan Jan consumer confidence index unexpectedly fell to a 1-3/4 year low, and the 10-year JGB 10-year bond yield fell to a 1-week low of 1.184%, weakening the yen’s interest rate differentials.
The Japan Jan consumer confidence index unexpectedly fell -1.0 to a 1-3/4 year low of 35.2, weaker than expectations of an increase to 36.5.
February gold (GCG25) today is up +7.40 (+0.27%), and March silver (SIH25) is up +0.773 (+2.50%). Precious metals today are moderately higher, with silver posting a 1-1/2 week high. Lower global bond yields today are bullish for precious metals. Precious metals also have some carryover support from Monday night’s comments from President Trump, who said he is considering universal tariffs on everything from steel and copper to semiconductor chips at “much bigger” than 2.5%. The increase in tariffs could boost price pressures and increase demand for precious metals as an inflation hedge.
Today’s stronger dollar is limiting gains in precious metals. Also, the December BOJ meeting minutes were hawkish and weighed on precious metals after BOJ policymakers agreed to raise interest rates if the economic outlook is realized.
