Dollar Little Changed Awaiting News on US-Iran Peace Talks

The dollar index (DXY00) today is up by +0.02%.  The dollar is little changed today, awaiting fresh news on US-Iran peace talks.  The dollar found some support today from hawkish comments from Cleveland Fed President Beth Hammack, who said her baseline is that the Fed is on hold for a "good while." Today's US economic news was mixed for the dollar after the Apr Empire manufacturing survey general business conditions rose more than expected to a 5-month high, but the Apr NAHB housing market index fell more than expected to a 7-month low. 

Gains in the dollar are limited today as geopolitical tensions ease after the AP reported that the US and Iran had reached an "in principle agreement" to extend the ceasefire to allow more time for diplomacy.

The US Apr Empire manufacturing survey of general business conditions rose +11.2 to a 5-month high of 11.0, stronger than expectations of 0.0.

The US Mar import price index ex-petroleum rose +0.1% m/m, weaker than expectations of +0.3% m/m.

The US Apr NAHB housing market index fell -4 to a 7-month low of 34, weaker than expectations of 37.

Swaps markets are discounting the odds at 2% for a +25 bp rate hike at the April 28-29 FOMC meeting.

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 by -0.02%.  The dollar's strength today is weighing on the euro.  Losses in the euro are limited after Eurozone Feb industrial production rose more than expected, and after crude oil prices turned lower, a positive factor for the Eurozone economy and the euro, as Europe imports most of its energy.

Eurozone Feb industrial production rose +0.4% m/m, stronger than expectations of +0.3% m/m.

Swaps are discounting a 22% chance of a +25 bp rate hike by the ECB at the April 30 policy meeting.

USD/JPY (^USDJPY) today is up by +0.14%.  The yen is falling today on reduced safe-haven demand after the Nikkei Stock Index rallied to a 1.5-month high.  Also, higher T-note yields today are bearish for the yen.

Losses in the yen are limited after Japan Feb core machine orders posted their largest increase in 15 years.  The yen also has carryover support from Tuesday, when Bloomberg reported that BOJ officials are likely to sharply raise their inflation forecast at this month's policy meeting, a hawkish factor for BOJ policy.

Japan Feb core machine orders rose +24.7% y/y, stronger than expectations of +8.1% y/y and the biggest increase in more than 15 years.

The markets are discounting a +24% chance of a 25 bp BOJ rate hike at the next meeting on April 28.

June COMEX gold (GCM26) today is up +3.00 (+0.06%), and May COMEX silver (SIK26) is up +0.972 (+1.22%).

Gold and silver prices climbed to 4-week highs today as optimism over peace talks between the US and Iran knocked crude prices lower, which eases inflation concerns and could prompt the world's central banks to pursue easier monetary policy, a bullish factor for precious metals.  The AP reported today that the US and Iran had reached an "in principle agreement" to extend the ceasefire to allow more time for diplomacy. 

Silver prices received support today after the Silver Institute said the global silver market will remain in deficit for a sixth consecutive year, with the 2026 global deficit widening by 15% to -46.3 million troy ounces. 

Gains in metals are limited amid a stronger dollar.  Also, hawkish comments today from Cleveland Fed President Beth Hammack pushed bond yields higher and weighed on precious metals prices when she said the Fed is on hold for a "good while." In addition, an easing of geopolitical tensions is bearish for precious metals after 

Precious metals still have safe-haven support over concerns about the escalation of the US-Iran war after President Trump ordered a full naval blockade of the Strait of Hormuz.  Also, uncertainty over US tariffs, US political turmoil, large US deficits, and government policy uncertainty are boosting demand for precious metals as a store of value.

Recent fund liquidation of precious metals is bearish for prices, as long holdings in gold ETFs fell to a 4-month low on March 31 after climbing to a 3.5-year high on February 27.  Also, long holdings in silver ETFs fell to a 7-month low on March 27 after rising to a 3.5-year high on December 23.

Strong central bank demand for gold is supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +160,000 ounces to 74.38 million troy ounces in March, the seventeenth consecutive month the PBOC has boosted its gold reserves.