The dollar index (DXY00) today is up +0.17% and posted a 2-1/2 week high. Better-than-expected US economic news today on May S&P CoreLogic composite-20 home prices, Jun JOLTS job openings, and Jul consumer confidence support the dollar. Also, the start of the 2-day FOMC meeting has sparked short-covering in the dollar.
The US May S&P CoreLogic composite-20 home price index rose +6.81% y/y, stronger than expectations of +6.60% y/y.
US Jun JOLTS job openings fell -46,000 to 8.184 million, showing a stronger labor market than expectations of 8.000 million.
The Conference Board US Jul consumer confidence index rose +2.5 to 100.3, stronger than expectations of 99.7.
The markets are discounting the chances for a -25 bp rate cut at 4% for this week's Tue/Wed FOMC meeting and 100% for the following meeting on Sep 17-18 if the FOMC does not cut rates this week.
EUR/USD (^EURUSD) today is down by -0.18%. The euro today added to Monday’s losses and posted a 3-1/2 week low due to a stronger dollar. Weakness in the euro is limited due to today’s stronger-than-expected economic news on Eurozone Q2 GDP, Eurozone Jul economic confidence, and German Jul CPI.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 93% for the September 12 meeting.
Eurozone Q2 GDP grew +0.3% q/q and +0.6% y/y, stronger than expectations of +0.2% q/q and +0.5% y/y.
Eurozone Jul economic confidence fell -0.1 to 95.8, stronger than expectations of 95.2.
German Jul CPI (EU harmonized) rose +0.5% m/m and +2.6% y/y, stronger than expectations of +0.4% m/m and +2.5% y/y.
USD/JPY (^USDJPY) today is up by +0.37%. The yen is under pressure today from a stronger dollar. Also, lower Japanese government bond yields are negative for the yen after the 10-year JGB bond yield fell to a 1-month low today. Losses in the yen are limited after today’s news showed the Japan Jun jobless rate unexpectedly fell, a hawkish factor for BOJ policy. The yen also has support on speculation the BOJ will announce that it will cut its monthly bond purchases after Wednesday’s 2-day policy meeting.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 50% for Thursday’s meeting and 100% for the September 20 meeting if there is no rate hike at the July 31 meeting.
The Japan Jun jobless rate unexpectedly fell -0.1 to 2.5%, showing a stronger labor market than expectations of no change at 2.6%.
August gold (GCQ24) today is up +8.60 (+0.36%), and September silver (SIU24) is up +0.169 (+0.61%). Precious metals today are moderately higher. Short covering ahead of a raft of central bank meetings this week from the Fed, BOE, and BOJ is boosting precious metals. Also, geopolitical concerns in the Middle East have boosted the appeal of precious metals as a haven asset.
Today’s rally in the dollar index to a 2-1/2 week high limits the upside in precious metals prices. Also, strength in stocks today has curbed safe-haven demand for precious metals. Silver prices have carryover pressure from today’s decline in copper prices to a 4-month low.
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.
