The dollar index (DXY00) today is down by -0.16%. The dollar is under pressure today on an easing of safe-haven demand as stocks rose after Reuters reported that the Iranian government said it is ready to discuss limitations on its uranium enrichment levels. Also, President Trump said he is willing to give diplomacy more time and won’t decide to strike Iran for another two weeks.
In addition, dovish comments today from Fed Governor Waller weighed on the dollar when he said, “I think we have room to bring interest rates down as early as July.” The dollar remained lower on the weaker-than-expected Philadelphia Fed business outlook report.
The US June Philadelphia Fed business outlook survey was unchanged at -4.0, weaker than expectations of an increase to -1.5.
US May leading economic indicators index fell -0.1% m/m, right on expectations, and the sixth consecutive month that the LEI has declined.
Fed Governor Waller said, “I think we have room to bring interest rates down as early as July, and then we can see kind of see what happens with inflation.”
The markets are discounting the chances at 15% for a -25 bp rate cut after the July 29-30 FOMC meeting.
EUR/USD (^EURUSD) today is up by +0.10%. The euro is moving higher today due to weakness in the dollar. However, gains in the euro are limited after the Eurozone’s June consumer confidence index unexpectedly fell and after German May producer prices posted their biggest decline in eight months, which were dovish factors for ECB policy.
The Eurozone June consumer confidence index unexpectedly fell -0.1 to -15.3, weaker than expectations of an increase to -14.9.
German May PPI fell -1.2% y/y, right on expectations and the biggest decline in 8 months.
Swaps are discounting the chances at 7% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
USD/JPY (^USDJPY) today is up by +0.31%. The yen gave up overnight gains and fell to a 3-week low against the dollar today as an easing of Middle East tensions curbed safe-haven demand for the yen. Reuters reported that the Iranian government said it is ready to discuss limitations on its uranium enrichment levels, and President Trump said he’s willing to give two weeks to see if diplomacy will work before attacking Iran. Higher T-note yields today are also weighing on the yen.