The dollar index (DXY00) today is down by -0.20%. Economic concerns are weighing on the dollar after today’s US economic news showed Feb retail sales rose less than expected, and the Mar Empire manufacturing survey of general business conditions fell to a 14-month low. The dollar is also under pressure because of tariff and trade war concerns. The dollar extended its losses today after the Mar NAHB housing market index unexpectedly fell to a 7-month low.
US Feb retail sales rose +0.2% m/m, weaker than expectations of +0.6% m/m, although Feb retail sales ex-autos rose +0.3% m/m, right on expectations.
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The US Mar Empire manufacturing survey of general business conditions fell -25.7 to a 14-month low of -20.0, weaker than expectations of -1.9.
The US Mar NAHB housing market index unexpectedly fell -3 to a 7-month low of 39, weaker than expectations of no change at 42.
The markets are discounting the chances at 1% for a -25 bp rate cut at the Tue-Wed FOMC meeting.
EUR/USD (^EURUSD) today is up by +0.22%. The dollar’s weakness today is benefiting the euro. Gains in the euro were limited after German bund yields fell due to dovish comments from ECB Vice President Guido, who said service inflation is moderating and moving toward lower levels. The euro also had carryover support from last Friday when German chancellor-in-waiting Merz reached an agreement with the Green party on a fiscal reform package for large investments in infrastructure and defense.
Swaps are discounting the chances at 54% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) today is up by +0.08%. The yen today is modestly lower on political uncertainty in Japan as support for Japanese Prime Minister Ishiba has plunged after he admitted to handing out shopping vouchers worth hundreds of dollars to newly-selected lawmakers, which increases the chances he could be replaced in summer elections. Today’s decline in T-note yields is limiting losses in the yen.
April gold (GCJ25) today is down -0.40 (-0.01%), and May silver (SIK25) is down -0.123 (-0.36%). Precious metals today are slightly lower on reduced safe-haven demand as US political risks eased after Congress late last Friday approved a 6-month continuing resolution to fund the government for six months. Silver prices are also under pressure from today’s weaker-than-expected US economic news on Feb retail sales, the Mar Empire manufacturing survey of general business conditions, and the Mar NAHB housing market index, which is negative for industrial metals demand.
Losses in precious metals today are limited by a weaker dollar and lower global government bond yields. Also, safe-haven demand for precious metals rose on heightened geopolitical risks after the US launched weekend strikes on Yemen’s Houthi rebels. In addition, the ongoing trade war has boosted the safe-haven demand for precious metals. Fund buying of gold supports prices after long gold positions in ETFs rose to a 17-month high last Friday.
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