The dollar index (DXY00) today is up by +0.18%. The dollar today is posting modest gains as T-note yields rise, which strengthened the dollar’s interest rate differentials. Also, hawkish comments today from Dallas Fed President Logan supported the dollar when she said she favors the Fed gradually lowering interest rates.
US Sep leading economic indicators fell -0.5% m/m, weaker than expectations of -0.3% m/m.
Dallas Fed President Logan said, "If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals."
The markets are discounting the chances at 92% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
EUR/USD (^EURUSD) today is down by -0.19%. The stronger dollar today is weighing on the euro. Also, today’s Eurozone economic news was bearish for the euro after German Sep producer prices fell more than expected, a dovish factor for ECB policy. Also, dovish comments today from ECB Governing Council member Simkus undercut the euro when he said “it’s clear” that the ECB will cut interest rates further.
German Sep PPI fell -0.5% m/m and -1.4% y/y, weaker than expectations of -0.2% m/m and -1.1% y/y.
ECB Governing Council member Simkus said the direction of ECB policy is clear, "that interest rates will be lowered further."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the December 12 meeting and a 25% chance of a -50 bp rate cut at the same meeting.
USD/JPY (^USDJPY) today is up by +0.43%. The yen is under pressure today due to the negative carryover from last Friday’s Bloomberg report, which said BOJ officials see little need to rush into raising interest rates at this month’s BOJ meeting. The yen extended its losses today as T-note yields climbed.
Swaps are pricing in the chances for a +10 bp rate hike by the BOJ at 2% for the October 30-31 meeting and at 30% for that +10 bp rate hike at the December 18-19 meeting.
December gold (GCZ24) today is up +21.80 (+0.80%), and December silver (SIZ24) is up +0.996 (+3.00%). Precious metals are climbing today, with Dec gold posting a contract high and nearest-futures (V24) gold posting a record high of $2,729.00 an ounce. Also, Dec silver posted a contract high, and nearest-futures (V24) silver posted an 11-year high. Precious metals are climbing today on safe-haven demand from Middle East tensions and uncertainty regarding next month's US presidential election. Demand for gold as a store of value increased today after Chinese banks cut their benchmark lending rates more than expected. In addition, dovish comments today from ECB Governing Council member Simkus supported precious metals when he said “it is clear” that the ECB will lower interest rates further. Today’s dollar strength is a negative factor for precious metals.
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.
