The dollar index (DXY00) today is down by -0.16%. Today's dovish comments from Boston Fed President Collins weighed on the dollar when she said she sees Fed rate cuts “soon” if inflation keeps falling. Losses in the dollar are limited as weakness in stocks boosted some liquidity demand for the dollar.
Boston Fed President Collins said, "If the data continue the way that I expect, I do believe that it will be appropriate soon for the FOMC to begin adjusting policy and easing how restrictive the policy is."
The markets are discounting the chances at 100% for a -25 bp rate cut at the Sep 17-18 FOMC meeting and at 59% for a -50 bp rate cut at that meeting.
EUR/USD (^EURUSD) today is up slightly by +0.06%. A weaker dollar today is supporting modest gains in the euro. Today’s rally in European nat-gas prices to an 8-month high may weigh on Eurozone economic prospects and limit gains in the euro.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 99% for the September 12 meeting.
USD/JPY (^USDJPY) today is down by -0.58%. The yen is climbing today against the dollar as T-note yields fall, a bullish factor for the yen. Also, the continued unwinding of yen-funded carry trades is boosting the yen as short positions in the yen are being covered after the BOJ unexpectedly hiked interest rates last week.
Swaps are pricing in the chances for a +10 bp rate hike by the BOJ at 1% for the September 20 meeting and +14% for the October 30-31 meeting.
December gold (GCZ24) today is up +7.80 (+0.32%), and September silver (SIU24) is down -0.061 (-0.22%). Precious metals today are mixed. A weaker dollar today is supportive of metals. Also, a decline in global bond yields today is bullish for precious metals. In addition, geopolitical risks in the Middle East are supportive of safe-haven demand for precious metals as Iran vowed a retaliatory strike against Israel in response to the assassination of a Hamas political leader in Tehran last week. Gold also found support today as a store of value after Boston Fed President Collins said the Fed will cut interest rates “soon” if inflation keeps falling.
Silver prices are being undercut by concern about weak industrial metals demand in China after LME copper inventories on Wednesday climbed to a nearly 5-year high of 294,750 MT, a sign of weak demand.
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.
