The dollar index (DXY00) today is down by -0.03%. The dollar gave up an early advance today and turned lower after a rally in stocks reduced liquidity demand for the dollar, following President Trump's announcement that he will indefinitely extend the ceasefire with Iran. Also, lower T-note yields today have weakened the dollar's interest rate differentials.
Losses in the dollar are limited as concerns about escalation of the US-Iran war are boosting safe-haven demand for the dollar. Iran seized two ships today in the Strait of Hormuz for "endangering maritime security," and the UK Navy said Islamic Revolutionary Guard Corps gunboats fired upon two other cargo ships.
Swaps markets are discounting the odds at 1% for a +25 bp rate hike at the April 28-29 FOMC meeting.
The dollar continues to be undercut by a poor outlook for interest rate differentials, with the FOMC expected to cut interest rates by at least -25 bp in 2026, while the BOJ and ECB are expected to raise rates by at least +25 bp in 2026.
EUR/USD (^EURUSD) today is down by -0.09% but remains above Tuesday's 1-week low. The euro is under pressure today after the Eurozone Apr consumer confidence index fell more than expected to a 3.25-year low. Also, dovish comments from ECB Governing Council members Kazaks and Simkus weighed on the euro, as they said the ECB should keep monetary policy unchanged in the near term. In addition, today's action by the German government to cut its German 2026 GDP forecast to 0.5% from 1.0% is negative for the euro. Finally, today's more than +2% rally in crude oil prices is negative for the Eurozone economy and the euro, as Europe imports most of its energy.
The Eurozone Apr consumer confidence index fell -4.2 to a 3.25-year low of -20.6, weaker than expectations of -17.2.
The German government cut its 2026 GDP forecast to 0.5% from 1.0% because of the US-Iran war.
ECB Governing Council member Martins Kazaks said there is no urgency for the ECB to raise interest rates from 2%, as the current data does not yet justify a move.
ECB Governing Council member Gediminas Simkus said the ECB shouldn't raise interest rates at its April meeting, but he can't rule out a rate hike later this year.
Swaps are discounting a 10% chance of a +25 bp rate hike by the ECB at the April 30 policy meeting.
USD/JPY (^USDJPY) today is down by -0.11%. The yen is moving higher today on better-than-expected Japanese trade news. Also, lower T-note yields today are supportive of the yen. Gains in the yen are limited after the Nikkei Stock Index rallied to a new record high today, curbing safe-haven demand for the yen. Also, today's rally in crude oil prices is bearish for the Japanese economy and the yen, as Japan imports more than 90% of its energy needs.
Japanese trade news was better than expected, with Mar exports rising 11.7% y/y, stronger than the 11.0% y/y expected. Also, Mar imports rose +10.9% y/y, stronger than expectations of +7.0% y/y and the biggest increase in 14 months.
The markets are discounting a +4% chance of a 25 bp BOJ rate hike at the next meeting on April 28.
June COMEX gold (GCM26) today is up +45.70 (+0.97%), and May COMEX silver (SIK26) is up +1.1822 (+2.38%).
Gold and silver prices are moving sharply higher today on increased safe-haven demand over concerns about the escalation of the US-Iran war. Iran today seized two ships in the Strait of Hormuz for "endangering maritime security," and the UK Navy said Islamic Revolutionary Guard Corps gunboats fired upon two other cargo ships. Lower global bond yields today are also supportive for precious metals.
Limiting gains in precious metals today is a rally in stocks that has curbed some safe-haven demand for precious metals. In addition, today's rally of more than +2% in crude oil prices boosts inflation expectations and may force the world's central banks to tighten monetary policy, a bearish factor for precious metals. A bearish factor for industrial metals demand and silver prices was today's action by the German government to cut its German 2026 GDP forecast to 0.5% from 1.0%.
Precious metals remain supported by uncertainty over US tariffs, US political turmoil, large US deficits, and government policy uncertainty, which are boosting demand for precious metals as a store of value.
Recent fund liquidation of precious metals is bearish for prices, as long holdings in gold ETFs fell to a 4-month low on March 31 after climbing to a 3.5-year high on February 27. Also, long holdings in silver ETFs fell to a 7-month low on March 27 after rising to a 3.5-year high on December 23.
Strong central bank demand for gold is supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +160,000 ounces to 74.38 million troy ounces in March, the seventeenth consecutive month the PBOC has boosted its gold reserves.
