The dollar index (DXY00) today is up by +0.32%. The dollar today is rebounding higher from Monday's 3-year low. Short covering emerged in the dollar today on trade deal optimism after US trade negotiators said they have made "significant progress" toward a bilateral trade deal with India following talks between Vice President Vance and Indian Prime Minister Modi.
Gains in the dollar are limited after today's news showed the US Apr Richmond Fed manufacturing survey of current conditions fell more than expected to a 5-month low. Also, a crisis of confidence in the dollar continues to be a problem due to fears that President Trump will try to fire Fed Chair Powell. The firing of Powell would question the independence of the Fed and further reduce confidence in the dollar, which is already under pressure from President Trump's aggressive trade tariffs that have prompted some foreign investors to liquidate their dollar assets.
The US Apr Richmond Fed manufacturing survey of current conditions index fell -9 to a 5-month low of -13, weaker than expectations of -7.
Today, the International Monetary Fund (IMF) cut its global 2025 GDP forecast to +2.8% from a January estimate of +3.3% and warned that the outlook could deteriorate further due to US tariffs sparking a global trade war. The IMF cut its 2025 US GDP forecast to +1.8% from a January estimate of +2.7% and cut its Eurozone 2025 GDP forecast to +0.8% from a January estimate of +1.0%.
This week's market focus will be on any changes to US trade policies. On Wednesday, March new home sales are expected to climb +0.7% m/m to 681,000. The Fed Beige Book will also be released on Wednesday. Thursday brings March capital goods new orders nondefense ex-aircraft and parts report (expected +0.1% m/m). Also, March existing home sales on Thursday are expected to fall -2.8% m/m to 4.14 million. Friday brings the revised University of Michigan April consumer sentiment index (expected no change at 50.8).
The markets are discounting the chances at 11% for a -25 bp rate cut after the May 6-7 FOMC meeting, down from a 30% chance last week.
EUR/USD (^EURUSD) today is down by -0.43%. The euro today fell back from Monday's 3-1/3 year high as a recovery in the dollar sparked long liquidation pressure in the euro. Also, dovish comments today from ECB Governing Council member Rehn weighed on the euro when he said Eurozone inflation is stabilizing at the 2% target, which could prompt the ECB to keep easing monetary policy. Losses in the euro accelerated today after the Eurozone Apr consumer confidence index fell more than expected to a 17-month low.
ECB Governing Council member Rehn said Eurozone inflation is stabilizing at the 2% target, and he sees the total tariff impact on Eurozone inflation as "modest."
The Eurozone Apr consumer confidence index fell -2.2 to a 17-month low of -16.7, weaker than expectations of -15.1.
Swaps are discounting the chances at 92% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
USD/JPY (^USDJPY) today is down by -0.04%. The yen added to Monday's gains today and posted a 7-month high against the dollar. A lack of confidence in the dollar has boosted safe-haven demand for the yen with President Trump's threats to remove Fed Chair Powell. The yen also has carryover support from Monday when a Bloomberg report said BOJ policymakers see little need to change their existing stance of gradually raising interest rates.
June gold (GCM25) today is up +18.40 (+0.54%), and May silver (SIK25) is up +0.254 (+0.78%). Precious metals prices today are moderately higher, with June gold soaring to a contract high and nearest-futures (J25) gold posting a new record high of $3,485.60 an ounce. Foreign doubts about the dollar has boosted demand for precious metals as a store of value, with President Trump threatening to fire Fed Chair Powell. Also, dovish comments today from ECB Governing Council member Rehn supported precious metals when he said he sees total tariff impact on Eurozone inflation as "modest," bolstering the outlook for additional ECB interest rate cuts. In addition, the ongoing US-China trade war is fueling safe-haven demand for precious metals. Finally, geopolitical risks in the Middle East are boosting safe-haven demand for precious metals after the Israel-Hamas ceasefire broke down and as the US continues strikes on Yemen's Houthi rebels.
Gains in precious metals are limited due to today's stronger dollar. Also, today's stock rebound has reduced some safe-haven demand for precious metals. Gains in silver are limited after the IMF today cut its global 2025 GDP forecast and from concerns that the ongoing US-China trade war would slow economic growth and demand for industrial 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.
