The dollar index (DXY00) today is up by +0.09%. Higher T-note yields today are supporting moderate gains in the dollar. However, the upside in the dollar is contained as strength in stocks today has curbed liquidity demand for the dollar.
Atlanta Fed President Bostic said "nothing has changed" regarding his view that maybe only one rate cut will be appropriate in 2024.
The markets are discounting the chances for a -25 bp rate cut at 5% for the June 11-12 FOMC meeting and 25% for the following meeting on July 30-31.
EUR/USD (^EURUSD) today is down by -0.03%. The euro is under pressure today from a stronger dollar. Also, central bank divergence is weighing on the euro, with the ECB expected to cut interest rates next month while the Fed delays rate cuts. Losses in the euro are limited by hawkish comments from ECB Governing Council member Kazaks, who warned against hasty interest rate cuts by the ECB after June.
ECB Governing Council member Kazaks said, "June seems the right moment to start lowering borrowing costs, but incoming data best determine decisions on any subsequent steps."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 97% for its next meeting on June 6.
USD/JPY (^USDJPY) today is up by +0.29%. Weaker-than-expected Japanese economic news today undercut the yen after the Japan Mar tertiary index posted its steepest decline in 3-3/4 years. The yen weakened further today after T-note yields rose. A supportive factor for the yen was today’s increase in the 10-year JGB bond yield to an 11-year high of 0.981%, which strengthens the yen’s interest rate differentials.
The Japan Mar tertiary index fell -2.4% m/m, weaker than expectations of -0.1% m/m and the biggest decline in 3-3/4 years.
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 29% for the June 14 meeting.
June gold (GCM4) today is up +3.7 (+0.15%), and July silver (SIN24) is up +0.451 (+1.44%). Precious metals prices today are moderately higher, with Jun gold posting a contact high and spot gold (K24) posting a record high. Also, July silver posted a contract high and spot silver (K24) posted an 11-year high.
Geopolitical uncertainty in Iran is boosting safe-haven demand for gold today after a helicopter crash killed Iranian President Raisi on Sunday. Silver has carryover support from today’s rally in copper prices to an all-time high.
On the negative side for metals today is a stronger dollar. Also, higher global bond yields today are bearish for precious metals. In addition, hawkish comments today from ECB Governing Council member Kazaks undercut gold when he warned against hasty interest rate cuts by the ECB after its June policy meeting.
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.
