The dollar index (DXY00) today is up by +0.49%. The dollar is climbing today on Monday night’s comments from President Trump, who said he was considering tariffs on everything from steel and copper to semiconductor chips and that he wants universal tariffs at “much bigger” than 2.5%. Also, higher T-note yields today have strengthened the dollar’s interest rate differentials. Today’s US economic news was mixed for the dollar after Dec capital goods new orders rose more than expected, but Jan consumer confidence unexpectedly fell to a 4-month low.
US Dec capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.5% m/m, stronger than expectations of +0.3% m/m.
The US Nov S&P CoreLogic composite-20 home price index rose +4.33% y/y, stronger than expectations of 4.24% y/y.
The Conference Board US Jan consumer confidence index unexpectedly fell -5.4 to a 4-month low of 104.1, weaker than expectations of 105.7.
The US Jan Richmond Fed manufacturing survey current conditions rose +6 to an 8-month high of -4, stronger than expectations of no change at -10.
The markets are discounting the chances at 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.52%. Today, the euro is under pressure from a stronger dollar. The euro is also weighed down by expectations that the ECB will cut interest rates by -25 bp at Thursday’s policy meeting.
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 up by +0.71%. The yen is falling today due to dollar strength and higher T-note yields. Also, Monday night’s comments from President Trump that he wants universal tariffs that are “much bigger” than 2.5% raised trade tensions and weighed on the yen. Today’s Japanese economic news was mixed for the yen as Dec PPI service prices unexpectedly eased, but Dec machine tool orders were revised upward.
Japan Dec PPI services prices unexpectedly eased to +2.9% y/y from +3.0% y/y in Nov versus expectations of an increase to +3.2% y/y.
Japan Dec machine tool orders were revised upward to +12.6% y/y from the previously reported +11.2% y/y, the biggest increase in 2-1/2 years.
February gold (GCG25) today is up +20.90 (+0.76%), and March silver (SIH25) is up +0.216 (+0.71%). Precious metals today are moderately higher. Precious metals rose on 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. Silver prices also garnered support from today’s global economic news that showed US Dec capital goods new orders nondefense ex-aircraft and parts rose more than expected, and Japan’s Dec machine tool orders were revised upward to a 2-1/2 year high, favorable factors for industrial metals demand.
Gains in precious metals today are limited due to a stronger dollar and higher global government bond yields. Also, a stock recovery today has curbed safe-haven demand for precious metals. In addition, President Trump’s comments on increasing tariffs to “much bigger” than 2.5% could lead to a trade war that slows economic growth and demand for industrial metals, a bearish factor for silver prices.
