The dollar index (DXY00) today is down by -0.48%. The dollar is moving lower today after US weekly jobless claims rose more than expected to a 6-week high, a dovish factor for Fed policy. Also, the euro moved higher and weighed on the dollar as French political tensions eased after National Rally leader Le Pen said France could pass a budget for 2025 in the next few weeks. Hawkish comments from San Francisco Fed President Daly pushed T-note yields higher and were supportive of the dollar when she said there's "no sense of urgency" for the Fed to lower interest rates.
US weekly initial unemployment claims rose +9,000 to a 6-week high of 224,000, showing a weaker labor market than expectations of 215,000.
The US Oct trade deficit narrowed to -$73.8 billion from -$83.8 billion in Sep, better than expectations of -$75.0 billion and a positive factor for Q4 GDP.
San Francisco Fed President Daly said there's "no sense of urgency" to lower interest rates, and policymakers can "carefully calibrate policy and make sure it's in line with the economy we have today and one we expect to have going forward."
The markets are discounting the chances at 68% for a -25 bp rate cut at the December 17-18 FOMC meeting.
EUR/USD (^EURUSD) today is up by +0.50%. The euro is moving higher today based on hawkish comments from ECB Governing Council member and Bundesbank President Nagel, who said the ECB shouldn't cut interest rates below neutral. The euro added to its gains as French political tensions eased slightly after National Rally leader Le Pen said she sees no case for President Macron to quit under current conditions and that France can pass a budget for 2025 in the next few weeks. Today’s news that showed a larger than expected decline in Eurozone Oct retail sales was bearish for the euro.
Eurozone Oct retail sales fell -0.5% m/m, weaker than expectations of -0.3% m/m and the biggest decline in 4 months.
The German Nov S&P construction PMI fell -2.2 to 38.0, the steepest pace of contraction in 7 months.
German Oct factory orders fell -1.5% m/m, a smaller decline than expectations of -2.0% m/m.
ECB Governing Council member and Bundesbank President Nagel said the ECB shouldn't cut interest rates below neutral as “I do not see a significant risk of inflation undershooting that would warrant the Eurosystem becoming expansionary in the near future."
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB for the December 12 meeting and at 7% for a -50 bp rate cut at the same meeting.
USD/JPY (^USDJPY) today is down by -0.13%. The yen is slightly higher today on hawkish comments from BOJ board member Nakamura, who said he doesn’t object to an interest rate hike by the BOJ, which bolstered speculation the BOJ could raise interest rates at the December 19 policy meeting. Limiting gains in the yen today are higher T-note yields.
February gold (GCG25) today is down -14.00 (-0.52%), and March silver (SIH25) is down -0.210 (-0.66%). Precious metals today are slightly lower. Hawkish central bank comments today pushed global bond yields higher and are weighing on precious metals after San Francisco Fed President Daly said there's "no sense of urgency" for the Fed to lower interest rates and after ECB Governing Council member Nagel said the ECB shouldn't cut interest rates below neutral. The easing of political turmoil in France also curbed safe-haven demand for precious metals after National Rally leader Le Pen said France can pass a budget for 2025 in the next few weeks. Limiting losses in precious metals today is a weaker dollar. Also, ramped-up hostilities in the Ukraine-Russia conflict support safe-haven demand for precious metals.
