The dollar index (DXY00) today is down by -0.25%.  The dollar is under pressure today as weaker-than-expected US Apr producer prices pushed T-note yields lower and boosted expectations for the Fed to cut interest rates.  Other US economic reports today are mixed for the dollar. 

US weekly initial unemployment claims were unchanged at 229,000, close to expectations of 228,000.

The US Apr final-demand PPI report of -0.5% m/m and +2.4% y/y was weaker than expectations of +0.2% m/m and +2.5% y/y.

US Apr retail sales rose +0.1% m/m, stronger than expectations of no change, although Apr retail sales ex-autos rose +0.1% m/m, weaker than expectations of +0.3% m/m.

The US May Empire manufacturing survey general business conditions index unexpectedly fell -1.1 to -9.2, weaker than expectations of an increase to -8.0.

The US May Philadelphia Fed business outlook survey general conditions index rose +22.4 to -4.0, stronger than expectations of -11.0.

US Apr manufacturing production fell -0.4% m/m, weaker than expectations of -0.3% m/m and the biggest decline in 6 months.

The US May NAHB housing market index unexpectedly fell -6 to a 1-1/2 year low of 34, weaker than expectations of no change at 40.

Fed Chair Powell said policymakers are considering changes to the framework that guides monetary policy decisions, including how they think about shortfalls in US employment and approach to their inflation target.  He added, “Anchored inflation expectations are critical to everything we do, and we remain fully committed to the 2% target today.”

The markets are discounting the chances at 8% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) today is up by +0.13%.  The euro is moving higher today due to weakness in the dollar. Also, today’s economic news showed that Eurozone Mar industrial production rose more than expected by the most in over 4 years, a bullish factor for the euro.

Gains in the euro are limited after Eurozone Q1 GDP was revised lower.  Also, comments from ECB Vice President Guindos weighed on the euro when he said that trade tensions, high funding costs, and weak economic growth could pose headwinds to Eurozone companies and households and that increased defense spending could pressure public finances.

Eurozone Q1 GDP was revised lower to +0.3% q/q from the previously reported +0.4% q/q.

Eurozone Mar industrial production rose +2.6% m/m, stronger than expectations of +2.0% m/m and the largest increase in 4-1/3 years.

Swaps are discounting the chances at 86% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) today is down by -0.60%.  The yen is climbing against the dollar today as a softer-than-expected US Apr PPI report bolstered the outlook for Fed rate cuts and weakened the dollar.  The yen was also boosted by today’s news that Japan’s Apr machine tool orders rose for the seventh consecutive month.  In addition, higher Japanese government bond yields are supporting the yen after the 10-year JGB bond yields climbed to a 6-week high today at 1.491%.  Finally, lower T-note yields today are positive for the yen.

Japan Apr machine tool orders rose +7.7% y/y, the seventh consecutive month orders have increased.

June gold (GCM25) today is up +17.30 (+0.54%), and July silver (SIN25) is down -0.059 (-0.18%).  Precious metals today are mixed, with silver falling to a 1-month low.  Gold prices recovered from a 5-week low today and moved higher after the dollar weakened on a weaker-than-expected US Apr PPI report. Also, lower T-note yields today are supportive of precious metals prices.  In addition, geopolitical risks in the Middle East continue to support safe-haven demand for precious metals as the Israel-Hamas conflict continues and as Israel recently launched an airstrike on Houthi rebels in Yemen.

Fund liquidation of long gold positions continues to weigh on prices due to the easing of US-China trade tensions after China and the US agreed to reduce tariffs on each other’s goods this past weekend.  Silver prices are also under pressure today due to demand concerns for industrial metals after the US Apr manufacturing production posted its biggest decline in 6 months, and after the Eurozone Q1 GDP was revised lower.