The dollar index (DXY00) today is down by -0.08% as strength in stocks has reduced liquidity demand for the dollar. Also, a decline in T-note yields today is weighing on the dollar.
The markets are discounting the chances for a -25 bp rate cut at 5% for the July 30-31 FOMC meeting
and 75% for the following meeting on Sep 17-18.
EUR/USD (^EURUSD) today is up by +0.09%. The euro is finding support today from a weaker dollar. Gains in EUR/USD are limited by lower government bond yields that weaken the euro’s interest rate differentials after the 10-year German bund yield today fell to a 1-1/2 week low.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 4% for the July 18 meeting and 74% for the September 12 meeting.
USD/JPY (^USDJPY) today is up by +0.15%. The yen is under pressure today after Reuters reported that the BOJ will likely cut this year's economic growth forecast when it meets later this month. Weakness in the yen is limited after Japan's Jun PPI accelerated to +2.9% y/y, the fastest pace of increase in 10 months and a hawkish factor for BOJ policy.
Japan’s June PPI accelerated to +2.9% y/y from +2.6% y/y in May, right on expectations and the largest increase in 10 months.
Reuters reported that the BOJ will likely cut this year's economic growth forecast when it meets later this month but will maintain its forecast that inflation will stay around its 2% target in the years through 2027.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 58% for the July 31 meeting and 39% for the September 20 meeting.
August gold (GCQ4) today is up +22.30 (+0.94%), and September silver (SIU24) is up +0.264 (+0.85%). Precious metals prices today are moderately higher. The dollar’s weakness today supported gains in metals. Also, a decline in global government bond yields today is bullish for precious metals. Fund buying of gold is another bullish factor after long gold holdings in ETFs rose for a sixth consecutive session Tuesday to a 2-3/4 month high. On the negative side, today’s rally in the S&P 500 to a new record high has curbed 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.
