The dollar index (DXY00) today is down by -0.04%. Comments from President Trump have reduced safe-haven demand for the dollar when he said that negotiations with Iran are continuing "at a rapid pace" and he's optimistic the US can reach an interim peace deal with Iran" over the next week." Also, lower T-note yields today have weakened the dollar's interest rate differentials. In addition, strength in China's yuan is weighing on the dollar, as the yuan climbed to a 3.25-year high against the dollar today.
The dollar recovered from its worst level after the US Apr JOLTS job openings unexpectedly rose to a 23-month high, a hawkish factor for Fed policy. Also, hawkish comments from Cleveland Fed President Beth Hammack boosted the dollar when she said the Fed's benchmark rate "may not be restrictive," and "if recent data trends continue, it may soon be appropriate for policy to act to address the growing risk of persistently elevated inflation."
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US Apr JOLTS job openings unexpectedly rose +731,000 to a 23-month high of 7.618 million, stronger than expectations of a decline to 6.866 million.
The swaps markets are discounting the odds at 2% for a +25 bp rate cut hike at the next FOMC meeting on June 16-17.
EUR/USD (^EURUSD) today is up +0.07% due to dollar weakness. Also, today's Eurozone May consumer price report showed prices climbing above the ECB's 2% target, a hawkish factor for ECB policy and supportive of the euro.
Eurozone May CPI rose +3.2% y/y, right on expectations and the fastest pace of increase in more than 2.5 years. May core CPI rose +2.5% y/y, stronger than expectations of +2.4% y/y and the fastest pace of increase in 13 months.
The markets are discounting a +98% chance for a +25 bp rate hike by the ECB at the next policy meeting on June 11.
USD/JPY (^USDJPY) today is up by +0.20%. The yen tumbled to a 1-month low against the dollar today. Today's dollar weakness is supportive of the yen. Also, lower Japanese government bond yields have weakened the yen's interest rate differentials as the 10-year JGB bond yield dropped to a 2.5-week low of 2.571% today. Lower T-note yields today are limiting losses in the yen.
The markets are discounting a +78% chance of a +25 bp BOJ rate hike at the next policy meeting on June 16.
August COMEX gold (GCQ26) today is up +28.40 (+0.63%), and July COMEX silver (SIN26) is up +0.826 (+1.10%).
Gold and silver prices are moving higher today amid a weaker dollar. Also, lower global bond yields today are supportive of precious metals. In addition, uncertainty over peace in the Middle East has boosted demand for precious metals as safe havens.
Gains in precious metals are limited after Eurozone May consumer prices rose further above the ECBs' 2% inflation target, which bolsters the outlook for the ECB to raise interest rates at this month's policy meeting. Also, today's stronger-than-expected US Apr JOLTS employment change report is hawkish for Fed policy and bearish for precious metals. In addition, hawkish comments today from Cleveland Fed President Beth Hammack were bearish for precious metals, as she said that if recent inflation trends continue, the Fed will be forced to raise interest rates.
Recent fund liquidation of precious metals is bearish for prices, as long holdings in gold ETFs fell to a 5.5-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 9.5-month low on May 5 after rising to a 3.5-year high on December 23.
Strong central bank demand for gold is supportive of gold prices, following news that bullion held in China's PBOC reserves rose by +260,000 ounces to 74.64 million troy ounces in April, the largest monthly increase in a year and the eighteenth consecutive month the PBOC has boosted its gold reserves.
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.
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