The dollar index (DXY00) today is down by -0.47%. The dollar today fell from a 1-week high and turned lower on today's US economic news that showed the Q1 core PCE price index revised lower and continuing unemployment claims unexpectedly climbing to a 3-1/2 year high, dovish factors for Fed policy. Strength in stocks today has also curbed liquidity demand for the dollar. Losses in the dollar accelerated after US Apr pending home sales posted their biggest decline in more than 2-1/2 years.
The dollar today initially moved higher after a US trade court late Wednesday ruled that some of President Trump's tariffs were illegal. The dollar also garnered support from today's US economic news that showed Q1 GDP revised upward.
US weekly initial unemployment claims rose +14,000 to 340,000, showing a weaker labor market than expectations of 230,000. Weekly continuing claims unexpectedly rose +22,000 to a 3-1/2 year high of 1.919 million versus expectations of a decline to 1.893 million.
US Q1 GDP was revised upward to -0.2% (q/q annualized) from the previously reported -0.3%. The Q1 core PCE price index was revised lower to 3.4% q/q from the previously reported 3.5% q/q.
US Apr pending home sales fell -6.3% m/m, weaker than expectations of -1.0% m/m and the largest decline in more than 2-1/2 years.
The US Court of International Trade issued a unanimous ruling late Wednesday that said President Trump wrongfully invoked an emergency ruling to justify his "Liberation Day" tariffs on global goods. The order applies to Trump's global 10% flat tariff, elevated rates on China and other countries, and his fentanyl-related tariffs on China, Canada, and Mexico. Other tariffs imposed under different powers, like the Section 232 and Section 301 tariffs, are unaffected and include the tariffs on steel, aluminum, and automobiles. The court gave the administration 10 days to "effectuate" its order.
The markets are discounting the chances at 2% for a -25 bp rate cut after the June 17-18 FOMC meeting.
EUR/USD (^EURUSD) today is up by +0.61%. The euro today recovered from a 1-1/2 week low and rallied after the dollar gave up overnight gains and turned lower. The euro initially moved lower on overnight trade after the dollar briefly spiked higher when a US trade court ruled that some of President Trump's tariffs were illegal.
Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
USD/JPY (^USDJPY) today is down by -0.40%. The yen today recovered from a 2-week low against the dollar and turned higher after the dollar gave up overnight gains and retreated on Fed-friendly US economic news on weekly jobless claims and the Q1 core PCE price index. The yen also garnered support on today's economic news that showed Japan's May consumer confidence index rose more than expected. In addition, lower T-note yields today are supportive of the yen.
The yen today initially moved lower when the dollar briefly rallied when a US trade court ruled that some of President Trump's tariffs were illegal. Also, the strength in global equity markets today has curbed safe-haven demand for the yen.
The Japan May consumer confidence index rose +1.6 to 32.8, stronger than expectations of 31.8.
June gold (GCM25) today is up +20.60 (+0.63%), and July silver (SIN25) is up +0.110 (+0.33%). Precious metals today recovered from early losses and turned higher after the dollar index fell from a 1-week high and moved lower. Today's US economic news showed weekly jobless claims rose more than expected, a dovish factor that knocked T-note yields lower and boosted precious metals prices. Precious metals prices also have continued safe-haven support from uncertainty about global trade relations and geopolitical tensions in Ukraine and the Middle East.
Gold prices today initially fell to a 1-week low after a US trade court late Wednesday ruled that some of President Trump's tariffs were illegal. Today's rally in global equity markets has also curbed safe-haven demand for precious metals. In addition, easing inflation expectations is curbing demand for gold as an inflation hedge after the US 10-year breakeven inflation rate fell to a 2-week low today.
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