Rich Asplund
3 min read
In This Article:
The dollar index (DXY00) today is up by +0.20%. The dollar is moving higher today with T-note yields on hawkish comments from Kansas City Fed President Schmid, who said the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates. Mr. Schmid's comments echoed hawkish remarks this week from other Fed officials, including Fed Chair Powell, New York Fed President Williams, and Atlanta Fed President Bostic, who stated that they are in no hurry to cut interest rates.
The dollar fell back from its best levels after US May new home sales fell -13.7% m/m to a 7-month low of 623,000, weaker than expectations of -6.7% m/m to 693,000.
Late Tuesday evening, Kansas City Fed President Schmid said the current "wait and see" monetary policy posture is appropriate as the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates.
The markets are discounting the chances at 21% for a -25 bp rate cut after the July 29-30 FOMC meeting.
EUR/USD (^EURUSD) today is down by -0.04%. The euro is under pressure today from a stronger dollar. Losses in the euro are contained after today's economic news showedEurozone May new car registrations rose by the most in five months, a sign of strength in consumer spending.
Eurozone May new car registrations rose +1.6% y/y to 927,000, the biggest increase in five months.
Swaps are discounting the chances at 8% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
USD/JPY (^USDJPY) today is up by +0.60%. The yen is sliding today as the current ceasefire between Israel and Iran is holding, which reduced safe-haven demand for the yen. Also, the summary of the June 16-17 BOJ meeting was dovish and negative for the yen as policymakers said it was appropriate to keep interest rates unchanged. Higher T-note yields today are also weighing on the yen.
On the positive side for the yen was today's news that Japan’s May PPI services prices rose more than expected, a hawkish factor for BOJ policy. Also, hawkish comments today from BOJ Board member Tamura were supportive of the yen when he said the BOJ may still raise interest rates despite economic uncertainty.
Japan May PPI services prices rose +3.3% y/y, stronger than expectations of +3.1% y/y.
