The dollar index (DXY00) today is up by +0.09%. The dollar is climbing today on a stronger-than-expected US Mar retail sales and Mar pending home sales reports. The dollar also has support on signs that Fed Chair nominee Kevin Warsh will support an independent Fed and prioritize low inflation. Politico reported that Fed Chair nominee Warsh’s prepared statement before the Senate Banking Committee later today will say that he is committed to ensuring that the conduct of monetary policy remains “strictly independent” and he is committed to keeping inflation in check, saying price stability is a mandate for the Fed “without excuse or equivocation.”
Gains in the dollar are limited today as stock strength reduces liquidity demand for the currency. Also, hopes that US-Iran negotiations will lead to an end to hostilities have curbed safe-haven demand for the dollar after Iran said it was sending a team to Pakistan for negotiations with the US.
US Mar retail sales rose +1.7% m/m, stronger than expectations of +1.4% m/m and the biggest increase in a year. Also, Mar retail sales ex-autos rose +1.9% m/m, stronger than expectations of +1.4% m/m and the biggest increase in 3 years.
US Mar pending home sales rose +1.5%, stronger than expectations of +0.5% m/m.
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 -0.17%. Today’s German April ZEW survey, which showed German investor optimism fell more than expected to a 3.5-year low, is weighing on the euro. Also, dollar strength today is bearish for the euro. Losses in the euro are limited by a -1% decline in crude oil prices, which is positive for the Eurozone economy and the euro, as Europe imports most of its energy.
The German Apr ZEW survey expectations of economic growth fell -16.7 to a 3.25-year low of -17.2, weaker than expectations of -5.8.
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 up by +0.19%. The yen is under pressure today from a stronger dollar. The yen is also sliding on today’s Nikkei report that said the BOJ is likely to keep interest rates unchanged at 0.75% at its policy meeting next week, given uncertainties stemming from the war in Iran. Today’s higher T-note yields are also bearish for the yen.
The Nikkei reported that the BOJ is likely to keep interest rates unchanged at 0.75% at its policy meeting next week, given uncertainties stemming from the war in Iran, and a decision on whether to raise rates will be delayed until the June meeting.
The markets are discounting a +5% chance of a 25 bp BOJ rate hike at the next meeting on April 28.
June COMEX gold (GCM26) today is down -31.40 (-0.65%), and May COMEX silver (SIK26) is down -1.208 (-1.51%).
Gold and silver prices are moving lower today amid a stronger dollar. Also, hopes that negotiations between the US and Iran will lead to the end of the war are curbing safe-haven demand for precious metals after Iran said it was sending a team to Pakistan to negotiate with the US. Today’s stronger-than-expected US Mar retail sales and Mar pending home sales reports are hawkish for Fed policy and are undercutting precious metals prices.
Concerns that the US-Iran war will persist are supporting safe-haven demand for precious metals after Iran on Saturday said the Strait of Hormuz was closed for shipping following a refusal by the US to lift a naval blockade of Iran’s vessels. Also, President Trump said it’s “highly unlikely” he will extend the ceasefire with Iran after Wednesday’s deadline. In addition, today’s report from the Nikkei said the BOJ is likely to keep interest rates unchanged at next week’s policy meeting, which is supportive for precious metals.
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.
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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