The dollar index (DXY00) today is up by +0.09%. The dollar today recovered from an 8-week low and is moderately higher as a slump in stocks has boosted liquidity demand for the dollar. Gains in the dollar are limited after the US Apr JOLTS job openings fell more than expected to a 3-year low, a dovish factor for Fed policy.
The US Apr JOLTS job openings fell -296,000 to a 3-year low of 8.059 million, showing a weaker labor market than expectations of 8.350 million.
US Apr factory orders rose +0.7% m/m, stronger than expectations of +0.6% m/m.
The markets are discounting the chances for a -25 bp rate cut at 1% for the June 11-12 FOMC meeting, 18% for the following meeting on July 30-31, and 58% for the meeting after that on Sep 17-18.
EUR/USD (^EURUSD) today is down by -0.32%. Today, the euro fell back from a 2-1/2 month high and turned lower as dollar strength sparked long liquidation in EUR/USD. Also, weaker-than-expected German labor news undercut the euro after German May unemployment rose more than expected. In addition, expectations that the ECB will cut its main refinancing rate by -25 bp at Thursday's meeting is negative for the euro.
The German May unemployment change rose by +25,000, the largest increase in 7 months, and it showed a weaker labor market than expected of +7,000.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 98% for Thursday’s ECB meeting. If the ECB cuts rates by -25 bp on Thursday as expected, then the markets are expecting a 0% chance of another rate cut at the following meeting on July 18 and a 62% chance of a -25 bp rate cut at the September 12 meeting.
USD/JPY (^USDJPY) today is down by -0.61%. The yen today extended Monday’s rally to a 2-1/2 week high against the dollar. The yen rallied today on a Blomberg report that said the BOJ would likely discuss the reduction of bond purchases as early as its policy meeting June 13-14. The yen also found support in comments from BOJ Deputy Governor Himino, who said it's important for authorities to monitor the impact of currencies on the broader economy. In addition, today’s decline in T-note yields is bullish for the yen.
BOJ Deputy Governor Himino said it's important for authorities to monitor the impact of currencies on the broader economy, as a weak yen can affect imports in addition to having other effects.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 24% for the June 14 meeting.
August gold (GCQ4) today is down -28.00 (-1.18%), and July silver (SIN24) is down -1.179 (-3.83%). Precious metals today are under pressure, with silver falling sharply to a 2-week low. A stronger dollar today is weighing on metals prices. Also, gold prices are undercut by a Bloomberg report today that said the BOJ is likely to discuss the reduction of bond purchases as early as its policy meeting on June 13-14. Silver prices are weighed down today by some negative carryover from a -2% fall in copper prices to a 4-week low.
On the positive side for precious metals is today’s decline in global bond yields. Also, stock weakness today has boosted some safe-haven demand 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.
