The dollar index (DXY00) today is up by +0.14% after recovering from early losses. The dollar saw support from stronger-than-expected US housing starts and building permits reports. Also, the US Feb import price index ex-petroleum report rose more than expected, a hawkish factor for Fed policy. Weakness in stocks today has also boosted liquidity demand for the dollar.
US Feb housing starts rose +11.2% m/m to 1.501 million, stronger than expectations of 1.385 million. Feb building permits, a proxy for future construction, fell -1.2% m/m to 1.456 million, a smaller decline than expectations of 1.453 million.
The US Feb import price index ex-petroleum rose +0.4% m/m, stronger than expectations of +0.2% m/m.
US Feb manufacturing production rose +0.9% m/m, stronger than expectations of +0.3% m/m and the biggest increase in a year.
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 down by -0.09%. The euro retreated from a 5-1/4 month high today and turned slightly lower after a recovery in the dollar sparked long liquidation pressures in the euro. EUR/USD today initially moved higher after the German Mar ZEW survey expectations of economic growth rose more than expected to a 3-year high. The euro also rose on expectations that the German parliament later today will pass a spending program that would usher in more expansive fiscal policy and boost economic growth.
The German Mar ZEW survey expectations of economic growth rose +25.6 to a 3-year high of 51.6, stronger than expectations of 48.3.
Swaps are discounting the chances at 55% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) today is up by +0.18%. The yen today dropped to a 1-1/2 week low against the dollar. Today's rally in the Nikkei Stock Index to a 2-1/2 week high has curbed safe-haven demand for the yen. Also, the larger-than-expected decline in the Japan Jan tertiary index is undercutting the yen. Today's higher T-note yields are also bearish for the yen. Losses in the yen are limited due to short covering and position squaring ahead of Wednesday's BOJ meeting.
The Japan Jan tertiary index fell -0.3% m/m, weaker than expectations of -0.1% m/m.
April gold (GCJ25) today is up +31.10 (+1.03%), and May silver (SIK25) is up +0.392 (+1.14%). Precious metals today are moderately higher, with April gold posting a contract high and nearest-futures (H25) gold posting an all-time high of $3,030.80 an ounce. Also, silver prices climbed to a 4-1/2 month high. Ramped-up geopolitical risks in the Middle East have sparked safe-haven buying of precious metals after Israel launched a series of airstrikes across Gaza, ending a two-month ceasefire with Hamas, and after the US launched weekend strikes on Yemen's Houthi rebels. Also, 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 Monday.
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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