The dollar index (DXY00) today is up by +0.23%. The dollar is climbing today on hopes of easing US-China trade tensions after the countries agreed to trade talks this weekend for the first time since President Trump imposed tariffs on US trading partners. Also, there is caution ahead of the results of the 2-day FOMC meeting later this afternoon, where Fed Chair Powell might strike a hawkish tone.
US Treasury Secretary Bessent and US Trade Representative Greer will travel to Switzerland for trade talks on Saturday and Sunday with Chinese Vice Premier He Lifeng. Bessent said the talks focus on de-escalating the tariff standoff between the two countries. He added that the current tariff rates aren't sustainable and are equivalent to a trade embargo.
The markets are discounting the chances at 2% for a -25 bp rate cut after today's 2-day FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.11%. The euro today is posting modest losses as the dollar strengthens ahead of US-China trade talks this weekend. Today's news that Eurozone Mar retail sales fell for the first time in 5 months is also bearish for the euro. Losses in the euro are limited after German Mar factory orders rose more than expected.
Eurozone Mar retail sales fell -0.1% m/m, right on expectations and the first decline in 5 months.
German Mar factory orders rose +3.6% m/m, stronger than expectations of +1.3% m/m.
Swaps are discounting the chances at 96% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
USD/JPY (^USDJPY) today is up by +0.61%. The yen is under pressure today as an easing of US-China trade tensions has reduced safe-haven demand for the yen after the US and China agreed to meet for trade negotiations for the first time since President Trump imposed tariffs on US trading partners. Today's upward revision to the Japan Apr Jibun Bank services PMI supported the yen.
The Japan Apr Jibun Bank services PMI was revised upward by +0.2 to 52.4 from the previously reported 52.2.
June gold (GCM25) today is down -29.20 (-0.85%), and July silver (SIN25) is down -0.521 (-1.56%). Precious metals prices today gave up early gains and are moderately lower, with gold falling from a 2-week high and silver falling from a 1-week high. The easing of US-China trade tensions today has boosted the dollar and sparked long liquidation in precious metals after both countries agreed to meet this weekend in Switzerland for trade negotiations. Also, today's stock strength is bearish for precious metals. In addition, precious metals prices are being pressured by caution ahead of the conclusion of the 2-day FOMC meeting later today when Fed Chair Powell might strike a hawkish tone.
Precious metals today initially moved higher on the increase in safe-haven demand due to escalating geopolitical risks in South Asia after India conducted military strikes against Pakistan in response to a militant attack in Kashmir. Pakistan called India's actions an "act of war" and said it reserves the right to retaliate. Also, the ongoing global trade turmoil caused by the US tariff policy has boosted the safe-haven demand for precious metals. In addition, geopolitical risks in the Middle East continue to support safe-haven demand for precious metals as the Israel-Hamas conflict continues and as Israel launched an airstrike on the Houthi-controlled airport and a power station in Sanaa, Yemen's capital, in retaliation for a Houthi missile strike against Israel last weekend.
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.
