The dollar index (DXY00) today is down -0.04%.  Today’s smaller-than-expected decline in weekly US jobless claims and the larger-than-expected decline in Jan existing home sales knocked T-note yields lower and are weighing on the dollar.  Also, strength in the Chinese yuan is pressuring the dollar, as the yuan rallied to a new 2.5-year high today.   Losses in the dollar are limited amid some carryover support from Wednesday’s better-than-expected US Jan payroll report that dampened speculation of additional Fed interest rate cuts.

US weekly initial unemployment claims fell -5,000 to 227,000, showing a slightly weaker labor market than expectations of 223,000.

US Jan existing home sales fell -8.4% m/m to a 16-month low of 3.91 million, weaker than expectations of 4.5 million.

The dollar sank to a 4-year low late last month when President Trump said he’s comfortable with the recent weakness in the dollar.  Also, the dollar remains under pressure as foreign investors pull capital from the US amid a growing budget deficit, fiscal profligacy, and widening political polarization. 

Swaps markets are discounting the odds at 6% for a -25 bp rate cut at the next policy meeting on March 17-18.

The dollar continues to see underlying weakness as the FOMC is expected to cut interest rates by about -50 bp in 2026, while the BOJ is expected to raise rates by another +25 bp in 2026, and the ECB is expected to leave rates unchanged in 2026. 

EUR/USD (^EURUSD) today is up by +0.09%.  The euro is moving higher today amid mild dollar weakness. Limiting gains in the euro is a decline in German bund yields, which has weakened the euro’s interest rate differentials after the 10-year German bund yield fell to a 2.25-month low of 2.782% today. 

Swaps are discounting a 3% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

USD/JPY (^USDJPY) today is down by -0.24%.  The yen rallied to a 2-week high against the dollar today, boosted by carryover support from Tuesday, when Japanese Prime Minister Takaichi eased fiscal concerns by saying any tax cut on food sales would not require an increase in debt issuance.  Also, lower T-note yields today are supportive of the yen. 

Gains in the yen are contained after today’s rally in the Nikkei Stock Index to a new record high, which reduced safe-haven demand for the yen.  Also, the smallest year-over-year increase in Japanese producer prices last month is dovish for BOPJ policy and negative for the yen. 

Japan Jan PPI rose +0.2% m/m and +2.3% y/y, right on expectations, with the +2.3% y/y gain the smallest year-over-year increase in 1.75 years.

The markets are discounting a +26% chance of a BOJ rate hike at the next meeting on March 19.

April COMEX gold (GCJ26) today is down -10.30 (-0.20%), and March COMEX silver (SIH26) is down -1.135 (-1.35%). 

Gold and silver prices are moving lower today.  Today's strength in stocks has reduced safe-haven demand for precious metals and is weighing on gold and silver prices.

Silver is under pressure today after US Jan existing home sales fell more than expected to a 16-month low, a negative factor for industrial metals demand.  Also, concerns about Chinese industrial metals demand are weighing on silver prices, as Chinese markets will be closed for more than a week during the Lunar New Year holiday starting on Monday.  Shrinking silver supplies in China are supportive for prices as silver stockpiles at warehouses linked to the Shanghai Futures Exchange fell to a 10-year low on Monday.

Dollar weakness today is supportive for metals prices.  Also, lower global bond yields are bullish for precious metals.  Escalating tensions between the US and Iran are boosting safe-haven demand for precious metals after Axios reported on Wednesday that the US could send a second aircraft carrier strike group to the Middle East should nuclear talks with Iran fail. 

Precious metals are supported by safe-haven demand amid uncertainty over US tariffs and geopolitical risks in Iran, Ukraine, the Middle East, and Venezuela.  Also, precious metals are surging as the dollar debasement trade gathers steam.  Late last month, President Trump said that he’s comfortable with the recent weakness in the dollar, which sparked demand for metals as a store of value.  In addition, US political uncertainty, large US deficits, and uncertainty regarding government policies are prompting investors to cut holdings of dollar assets and shift into precious metals. 

Strong central bank demand for gold is also supportive of 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. 

Finally, increased liquidity in the financial system is boosting demand for precious metals as a store of value, following the FOMC’s December 10 announcement of a $40 billion-per-month liquidity injection into the US financial system.

Gold and silver plunged from record highs on January 30 when President Trump announced he had nominated Keven Warsh as the new Fed Chair, which fueled massive liquidation of long positions in precious metals.  Mr. Warsh is one of the more hawkish candidates for Fed Chair and is seen as less supportive of deep interest rate cuts.  Also, recent volatility in precious metals prices has prompted trading exchanges worldwide to raise margin requirements for gold and silver, leading to the liquidation of long positions. 

Fund demand for precious metals remains strong, with long holdings in gold ETFs climbing to a 3.5-year high on January 28.  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 2.5-month low last Monday.