The dollar index (DXY00) today is up by +0.43%. Today’s sharp drop in equity markets has boosted liquidity demand for the dollar. Also, Wednesday night’s comments from President Trump that the Iran war could escalate have boosted demand for the dollar as a safe-haven. The dollar added to its gains today on better-than-expected US economic news on weekly jobless claims and the Feb trade deficit.
During a speech to the American public on Wednesday evening, Mr. Trump pledged more aggressive action against Iran over the next two to three weeks and offered no concrete plans to reopen the Strait of Hormuz.
US weekly initial unemployment claims unexpectedly fell -9,000 to a 2.5-month low of 202,000, showing a stronger labor market than expectations of an increase to 212,000.
The US Feb trade deficit was -$57.3 billion, narrower than expectations of -$60.6 billion.
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 -0.48%. The euro is under pressure today from a stronger dollar. Also, today’s +10% surge in crude oil prices to a 3.5-week high is negative for the euro and the Eurozone economy, which imports most of its energy needs.
Swaps are discounting a 56% chance of a +25 bp rate hike by the ECB at the April 30 policy meeting.
USD/JPY (^USDJPY) today is up by +0.36%. The yen is moving lower today amid a stronger dollar. Also, today’s +10% surge in crude oil prices is negative for the yen and the Japanese economy, which imports 90% of its energy needs. The yen added to its losses today as T-note yields rose.
The markets are discounting a +69% chance of a 25 bp BOJ rate hike at the next meeting on April 28.
June COMEX gold (GCM26) today is down -139.40 (-2.90%), and May COMEX silver (SIK26) is down -4.478 (-5.89%).
Gold and silver prices are falling sharply today. pressured by a stronger dollar and higher global bond yields. Precious metals are also selling off today after President Trump’s comments on Wednesday evening signaled that the Iran war will continue. The ongoing war is pushing crude oil prices sharply higher, boosting inflation and potentially prompting the world’s central banks to tighten monetary policy, a negative factor for precious metals.
