The dollar index (DXY00) today is up +0.27%.
The dollar is seeing support from today's upward spike in oil prices to the $100 per barrel area, which is hawkish for Fed policy. Also, higher oil prices are beneficial for the dollar since the US is the world's largest oil-producing country.
The dollar continued to be undercut by last Friday's weak US economic news, which included the -92,000 decline in US Feb payrolls and the -0.2% m/m decline in US Jan retail sales.
Swaps markets are discounting the odds at 4% for a -25 bp rate cut at the next policy meeting on March 17-18.
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 -0.45%. The euro is being undercut by the dollar's strength. Also, the latest surge in oil prices is negative for the euro since the Eurozone economy is heavily dependent on imported oil and natural gas.
Swaps are discounting a 1% chance of a +25 bp rate hike by the ECB at its next policy meeting on March 19.
USD/JPY (^USDJPY) is up +0.39%. The yen is seeing weakness on today's new upward spike in oil prices. High oil prices weigh on Japan's economy, which depends heavily on imported energy.
The markets are discounting a +5% chance of a BOJ rate hike at the next meeting on March 19.
April COMEX gold (GCJ26) is down -53.1 (-1.02%), and May COMEX silver (SIK26) is up +0.164 (+0.19%).
Gold prices are trading lower today amid long liquidation and a stronger dollar. In addition, today's fresh upward spike in oil prices puts pressure on President Trump to end the war with Iran sooner rather than later.
Still, precious metals have underlying support from safe-haven demand tied to worries that the US and Israeli war against Iran will drag on. Iran's Assembly of Experts over the weekend appointed hardliner Mojtaba Khamenei as Iran's new supreme leader, the son of Ayatollah Ali Khamenei. President Trump said he is "not happy" with the choice of the new leader.
Strong central bank demand for gold is also supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +40,000 ounces to 74.19 million troy ounces in January, the fifteenth consecutive month the PBOC has boosted its gold reserves.
Fund demand for precious metals remains strong, with long holdings in gold ETFs climbing to a 3.5-year high on February 27. Also, long holdings in silver ETFs rose to a 3.5-year high on December 23, though liquidation has since knocked them down to a 3.5-month low on February 23.
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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