The dollar index (DXY00) today is up by +0.20%. The dollar is moving higher today with T-note yields on hawkish comments from Kansas City Fed President Schmid, who said the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates. Mr. Schmid's comments echoed hawkish remarks this week from other Fed officials, including Fed Chair Powell, New York Fed President Williams, and Atlanta Fed President Bostic, who stated that they are in no hurry to cut interest rates.
The dollar fell back from its best levels after US May new home sales fell -13.7% m/m to a 7-month low of 623,000, weaker than expectations of -6.7% m/m to 693,000.
Late Tuesday evening, Kansas City Fed President Schmid said the current "wait and see" monetary policy posture is appropriate as the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates.
The markets are discounting the chances at 21% for a -25 bp rate cut after the July 29-30 FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.04%. The euro is under pressure today from a stronger dollar. Losses in the euro are contained after today's economic news showedEurozone May new car registrations rose by the most in five months, a sign of strength in consumer spending.
Eurozone May new car registrations rose +1.6% y/y to 927,000, the biggest increase in five months.
Swaps are discounting the chances at 8% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
USD/JPY (^USDJPY) today is up by +0.60%. The yen is sliding today as the current ceasefire between Israel and Iran is holding, which reduced safe-haven demand for the yen. Also, the summary of the June 16-17 BOJ meeting was dovish and negative for the yen as policymakers said it was appropriate to keep interest rates unchanged. Higher T-note yields today are also weighing on the yen.
On the positive side for the yen was today's news that Japan’s May PPI services prices rose more than expected, a hawkish factor for BOJ policy. Also, hawkish comments today from BOJ Board member Tamura were supportive of the yen when he said the BOJ may still raise interest rates despite economic uncertainty.
Japan May PPI services prices rose +3.3% y/y, stronger than expectations of +3.1% y/y.
The Japan Apr leading index CI was revised upward by +0.8 to 104.2 from the previously reported 103.4.
BOJ Board member Tamura said it may be necessary for the BOJ to raise interest rates if inflation risks rise, despite economic uncertainty.
The summary of opinions from the June 16-17 BOJ policy meeting stated that board members said uncertainty is extremely high and that it's appropriate to maintain monetary policy for the time being.
August gold (GCQ25) today is down -1.80 (-0.05%), and July silver (SIN25) is up +0.133 (+0.37%). Precious metals today are mixed as they consolidate Tuesday's sharp losses. Today's dollar strength is bearish for precious metals. Also, the lasting ceasefire between Israel and Iran eases geopolitical risks in the Middle East and curbs safe-haven demand for precious metals. In addition, hawkish central bank comments are negative for precious metals after Kansas City Fed President Schmid said he favored the Fed holding interest rates steady and BOJ Board member Tamura said the BOJ may need to raise interest rates despite economic uncertainty.
Tariff concerns are boosting safe-haven demand for precious metals with two weeks to go until the 90-day pause on President Trump's reciprocal tariffs expires on July 9. Fund buying of gold and silver continues to support prices as gold holdings in ETFs rose to a 1-3/4 year high Tuesday, and silver holdings in ETFs rose to a 2-3/4 year high.
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.
