The dollar index (DXY00) today is down -0.03%. The dollar today is being undercut by reduced safe-haven demand after Israel launched a limited retaliatory strike against Iran, reducing the chances for an all-out Middle East conflagration. However, the dollar is seeing underlying support from today’s +1.6 bp rise in the 10-year T-note yield.
The markets are discounting the chances at 96% 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 up +0.22%. In a supportive comment for the euro, Belgian central bank chief Pierre Wunsch said there is no urgency to cut interest rates quicker and that the ECB could even live with a small, temporary overshoot of its inflation target. He said there is no great risk of a sustained dip in inflation below the ECB’s 2% target.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB for the December 12 meeting and at 45% for a -50 bp rate cut at the same meeting.
USD/JPY (^USDJPY) today is up +0.47%. The yen fell on Japanese political uncertainty after the LDP-led coalition lost its majority in the lower house of Parliament in the weekend election. The yen fell on the reduced chance for an interest rate hike amidst the political uncertainty. However, Japanese stocks rallied on ideas that any coalition government might need to launch a fiscal stimulus plan to boost the economy.
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 22% for that +10 bp rate hike at the December 18-19 meeting.
December gold (GCZ24) today is down -0.2 (-0.01%), and December silver (SIZ24) is up +0.086 (+0.25%). Precious metals have support from the slightly lower dollar. However, precious metals are being undercut by reduced safe-haven demand after Middle East tensions fell on Israel’s limited retaliatory strike on Iran. Gold was also under pressure from hawkish remarks today by Belgium’s central bank chief.
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.
