The dollar index (DXY00) today is down by -0.03% and posted a new 7-1/2 month low. Strength in stocks today has reduced liquidity demand for the dollar. Also, speculation that the US Bureau of Labor Statistics will revise US payroll growth lower today is undercutting the dollar.
The markets are discounting the chances at 100% for a -25 bp rate cut at the Sep 17-18 FOMC meeting and at 34% for a -50 bp rate cut at that meeting.
EUR/USD (^EURUSD) today is down by -0.09%. The euro today fell back from a 7-1/2 month high and is slightly lower. Dovish comments today from ECB Governing Council member Panetta weighed on the euro when he said it’s reasonable to think interest rates in the Eurozone will fall.
ECB Governing Council member and Bank of Italy Governor Panetta said that inflation in the Eurozone is falling and "it is reasonable to think that we are going toward a phase of loosening of monetary policy."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 100% for the September 12 meeting.
USD/JPY (^USDJPY) today is up by +0.44%. The yen fell back from a 2-week high against the dollar today and is moderately lower. Long liquidation in the yen pressured prices ahead of BOJ Governor Ueda’s testimony before the Japanese parliament on Friday. Lower T-note yields today are limiting losses in the yen.
Swaps are pricing in the chances for a +10 bp rate hike by the BOJ at 0% for the September 20 meeting and +12% for the October 30-31 meeting.
December gold (GCZ24) today is down -7.60 (-0.30%), and September silver (SIU24) is down -0.044 (-0.15%). Precious metals today are slightly lower. Strength in stocks today has curbed safe-haven demand for precious metals. Also, long liquidation and profit-taking are weighing on prices after gold posted a record high on Tuesday.
Today’s decline in global bond yields is bullish for precious metals prices. Also, dovish comments from ECB Governing Council member Panetta today supported gold when he said it’s reasonable to think that interest rates in the Eurozone will fall. In addition, safe-haven demand for precious metals remains strong on concern that Iran may yet attack Israel as retaliation for the recent assassination of a Hamas political leader in Tehran.
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.
