rewrite this content and keep HTML tags as is. This is content from rss feed and I don’t need their *Daily Debrief Newsletter*, their tags from bottom like this *Share this articleCategoriesTags*, Editorial Process section, phrases like *Featured image from Peakpx, chart from Tradingview.com*, SPECIAL OFFERS and similar sections – just remove such sections and save only article itself:
The dollar index (DXY00) on Thursday tumbled to a 1.5-week low and finished down by -0.95%. Thursday’s +2% rally in the yen weighed on the dollar after the Nikkei reported that the Japanese government and the BOJ conducted yen-buying operations. Earlier on Thursday, Japanese Finance Minister Satsuki Katayama warned that Japan is close to intervening in the forex market to support the yen. Also, lower crude oil prices on Thursday eased inflation expectations, a dovish factor for Fed policy, and a negative factor for the dollar. The dollar extended its losses on Thursday after US Q1 GDP grew at a slower-than-expected pace and Mar leading indicators fell by the most in eleven months.
The dollar found some support on Thursday after US weekly jobless claims fell to a 57-year low, the Q1 employment cost index rose more than expected, and the US Mar core PCE price index, the Fed’s preferred inflation gauge, rose 3.2% y/y, the largest increase in 2.25 years.
Join 200K+ Subscribers:
Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
Heightened US-Iran tensions are boosting demand for the dollar as a safe-haven. The US and Iran are locked in a battle for control of the Strait of Hormuz, with both sides blocking the waterway to gain leverage during an extended ceasefire. Axios reported that President Trump will be briefed on new military options for action in Iran, signaling the potential for fresh escalation in the war. US Central Command has prepared a plan for a “short and powerful” wave of strikes on Iran, likely infrastructure targets.
US weekly initial unemployment claims fell -26,000 to a 57-year low of 189,000, showing a stronger labor market than expectations of 212,000. Weekly continuing claims fell -23,000 to a 2-year low of 1.785 million, showing a stronger labor market than expectations of 1.815 million.
US Mar personal spending rose +0.9% m/m, right on expectations. Mar personal income rose +0.6% m/m, stronger than expectations of +0.3% m/m.
The US Mar core PCE price index, the Fed’s preferred inflation gauge, rose +0.3% m/m and +3.2% y/y, right on expectations, with the +3.2% y/y gain the largest increase in 2.25 years.
The US Q1 employment cost index rose +0.9%, stronger than expectations of +0.8%
US Q1 GDP rose +2.0% (q/q annualized), weaker than expectations of +2.3%. The Q1 core PCE price index rose +4.3%, stronger than expectations of +4.1% and the largest increase in 3 years.
The US Apr MNI Chicago PMI unexpectedly fell -3.6 to a 4-month low of 49.2, weaker than expectations of an increase to 54.9.
US Mar leading indicators fell -0.6% m/m, weaker than expectations of -0.2% m/m and the biggest decline in 11 months.
Swaps markets are discounting the odds at 4% for a 25 bp rate cut at the next FOMC meeting on June 16-17.
EUR/USD (^EURUSD) recovered from a 2-week low on Thursday and finished up by +0.52%. The euro found support on Thursday from a weaker dollar. Also, Eurozone Apr CPI rose at the fastest pace in 2.5 years, and the Eurozone Mar unemployment rate matched a record low, hawkish factors for ECB policy. Gains in the euro accelerated on Thursday afternoon after several ECB officials said the ECB will raise interest rates at its June meeting if energy prices keep climbing.
On the negative side for the euro was Thursday’s Eurozone economic news, which showed that Eurozone Q1 GDP grew at a weaker-than-expected pace and that German March retail sales fell by the most in nearly 3.5 years.
Eurozone Apr CPI rose +3.0% y/y, right on expectations and the strongest pace of increase in 2.5 years. Apr core CPI rose +2.2% y/y, right on expectations.
The Eurozone Mar unemployment rate fell -0.1 and matched a record low of 6.2%, right on expectations.
Eurozone Q1 GDP rose +0.1% q/q and +0.8% y/y, weaker than expectations of +0.2% m/m and +0.9% y/y.
German Mar retail sales fell -2.0% m/m, weaker than expectations of -0.2% m/m and the biggest decline in nearly 3.5 years.
The German Apr unemployment change rose by +20,000, showing a weaker labor market than expectations of 4,300. The Apr unemployment rate was unchanged at 6.4%, showing a weaker labor market than expectations of 6.3%
The ECB, as expected, kept the deposit facility rate unchanged at 2.00% and said, “The upside risks to inflation and the downside risks to growth have intensified.”
ECB President Christine Lagarde said, “The economic growth outlook is highly uncertain and will depend on how long the war in the Middle East will last, how strongly it affects energy and other commodity markets, as well as global supply chains.” She added, “Incoming information suggests the conflict is weighing on economic activity, surveys point to slowing growth, and consumers and businesses have become less confident about the future.”
Bloomberg reported that several ECB officials said they are likely to raise interest rates at their June meeting unless there are positive developments on energy prices and an end to the Iran war.
Swaps are discounting an 89% chance of a +25 bp rate hike by the ECB at the next policy meeting on June 11.
USD/JPY (^USDJPY) on Thursday fell sharply by -2.48%. The yen recovered from a 1.75-year low on Thursday and rallied to a 2-month high after the Nikkei reported that the Japanese government and the BOJ conducted yen-buying operations in the forex market. Earlier on Thursday, Japanese Finance Minister Satsuki Katayama warned that “the time was near” for Japan to intervene in the currency market to support the yen. Also, Thursday’s -1% decline in crude oil prices is positive for the Japanese economy and the yen, as Japan imports more than 90% of its energy needs.
The yen initially weakened on Thursday when crude oil prices surged to a 3-week high in overnight trade. Also, the larger-than-expected decline in Japan’s Apr consumer confidence index to a 1-year low, along with the unexpected decline in Mar industrial production, were bearish for the yen.
The Japan Apr consumer confidence index fell -1.1 to a 1-year low of 32.2, weaker than expectations of 32.8.
Japan Mar industrial production unexpectedly fell -0.5% m/m, weaker than expectations of a +1.1% m/m increase.
Japan Mar retail sales rose +1.3% m/m, stronger than expectations of +0.6% m/m.
Japanese Finance Minister Satsuki Katayama said the time “for taking bold steps is now nearing” after the yen fell to a 1.75-year low, suggesting Japanese officials are close to intervening in the currency market to support the yen.
The markets are discounting a +65% chance of a 25 bp BOJ rate hike at the next policy meeting on June 16.
June COMEX gold (GCM26) on Thursday closed up +68.10 (+1.49%), and May COMEX silver (SIK26) closed up +1.965 (+2.75%).
Gold and silver prices settled sharply higher on Thursday as the dollar index tumbled to a 1.5-week low. Also, Thursday’s -1% fall in crude oil prices lowers inflation expectations and may prompt the world’s central banks to pursue easier monetary policies, a bullish factor for precious metals. In addition, lower global bond yields on Thursday were supportive of precious metals.
Heightened Middle East tensions are positive for safe-haven demand of precious metals as both the US and Iran are maintaining blockades of the Strait of Hormuz. Axios reported that President Trump will be briefed on new military options for action in Iran, signaling the potential for fresh escalation in the war. US Central Command has prepared a plan for a “short and powerful” wave of strikes on Iran, likely infrastructure targets.
Precious metals also 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 4.5-month low on March 31 after climbing to a 3.5-year high on February 27. Also, long holdings in silver ETFs fell to an 8.5-month low on Wednesday 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
