Dollar Falls Ahead of President Trump's Tariff Plans
The dollar index (DXY00) Wednesday fell by -0.42% and posted a 1-1/2 week low. The dollar is under pressure because of concerns that US tariffs will start a trade war that derails the economy. Also, a recovery in stock prices on Wednesday reduced liquidity demand for the dollar. Losses in the dollar were limited after the US Mar ADP employment and Feb factory orders reports rose more than expected, which is a hawkish factor for Fed policy.
The US Mar ADP employment change rose +155,000, stronger than expectations of +120,000.
US Feb factory orders rose +0.6% m/m, stronger than expectations of +0.5% m/m.
Market attention this week will include Thursday's March ISM services index (expected to fall -0.5 to 53.0), and on Friday, March nonfarm payrolls are expected to increase by +138,000, and the March unemployment rate is expected to be unchanged at 4.1%. Also, March average hourly earnings are expected to be +0.3% m/m and +4.0% y/y, unchanged from February. Finally, on Friday, Fed Chair Powell is scheduled to speak to the Society for Advancing Business Editing and Writing Conference on the economic outlook.
The markets are discounting the chances at 14% for a -25 bp rate cut after the May 6-7 FOMC meeting.
EUR/USD (^EURUSD) Wednesday rose by +0.54% and posted a 1-1/2 week high. The euro moved moderately higher on Wednesday as dollar weakness sparked some short covering in the euro. Gains in the euro accelerated due to hawkish comments from ECB Governing Council member Holzmann, who said he was against an ECB interest rate cut at the April 17 policy meeting.
Limiting gains in the euro is the concern that US tariffs will ignite a trade war that derails the global economy. Also, lower German bund yields today have weakened the euro's interest rate differentials after the 10-year German bund yields fell to a 4-week low.
ECB Governing Council member Holzmann said he's against an ECB interest rate cut at this month's policy meeting, 'as we are neutral and inflation is converging to target, there is no reason to become accommodative.'
Swaps are discounting the chances at 74% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) Wednesday rose by +0.23%. The yen on Wednesday gave up an early advance and turned lower after T-note yields erased an early decline and moved higher, sparking long liquidation in the yen. The yen was also under pressure due to a fall in Japanese government bond yields after the 10-year JGB bond yield today fell to a 4-week low, weakening the yen's interest rate differentials.
June gold (GCM2 5) Wednesday closed up +20.20 (+0.64%), and May silver (SIK2 5) closed up +0.341 (+0.99%). Precious metals settled moderately higher on Wednesday, with June gold posting a contract high. Wednesday's fall in the dollar index to a 1-1/2 week low is bullish for metals. Also, trade war concerns continue to fuel safe-haven demand for precious metals ahead of President Trump's announcement on new reciprocal tariffs later Wednesday. In addition, geopolitical risks in the Middle East are boosting safe-haven demand for precious metals as Israel continues airstrikes across Gaza, ending a two-month ceasefire with Hamas, and as the US continues to launch strikes on Yemen's Houthi rebels. Fund buying of gold supports prices after long gold positions in ETFs rose to a 1-1/2 year high Tuesday. Silver also has support on concern about retaliatory tariffs on silver exports from Canada and Mexico, where the US gets 70% of its silver.
Falling inflation expectations are bearish for gold as they curb demand for gold as an inflation hedge after the US 10-year breakeven inflation rate Wednesday fell to a 1-1/2 week low. Also, hawkish comments Wednesday from ECB Governing Council member Holzmann were bearish for precious metals when he said he was against an ECB interest rate cut at this month's policy meeting. Silver prices are also undercut by concerns that US tariffs will lead to a trade war that derails economic growth and industrial metals demand.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Toronto Star
21 minutes ago
- Toronto Star
Goalie Flekken leaves Brentford for Bayer Leverkusen in pursuit of Champions League glory
LEVERKUSEN, Germany (AP) — Bayer Leverkusen completed the signing of goalkeeper Mark Flekken from Brentford on Tuesday. The Netherlands international signed a three-year deal until June 30, 2028, for an undisclosed fee. 'Mark Flekken possesses a wide range of skills that a goalkeeper in modern top-flight football needs,' Leverkusen sporting director Simon Rolfes said. 'He has strong reflexes, good control of the penalty area, and, thanks to his height of 1.95 meters, has tremendous reach. ARTICLE CONTINUES BELOW 'Mark exudes an impressive physical presence; from a footballing perspective, he has certainly been one of the best goalkeepers in the Premier League over the past two years.' The 31-year-old Flekken spent two years at Brentford, making 77 appearances for the Premier League club. 'We were expecting Mark to be our goalkeeper for many more years, however when Bayer Leverkusen made it known that they wanted to do this transfer, and Mark made it clear that he was interested in moving closer to home and with a possibility of Champions League football, we turned our attention towards how all parties could make this happen,' Brentford director of football Phil Giles said. Flekken previously played in Germany with Duisburg and Freiburg, but has the chance to compete for the biggest titles with the 2024 Bundesliga champion, which has just hired former Manchester United manager Erik ten Hag as its new coach. 'To be able to contribute my qualities to a top German club with ambitious national and European goals now makes me very happy,' Flekken said. 'I love the Bundesliga and, of course, I'm also looking forward to challenging for the Champions League with the Werkself.' Liverpool goalkeeper Caoimhin Kelleher is expected to replace Flekken at Brentford. ___ AP soccer:
Winnipeg Free Press
an hour ago
- Winnipeg Free Press
Goalie Flekken leaves Brentford for Bayer Leverkusen in pursuit of Champions League glory
LEVERKUSEN, Germany (AP) — Bayer Leverkusen completed the signing of goalkeeper Mark Flekken from Brentford on Tuesday. The Netherlands international signed a three-year deal until June 30, 2028, for an undisclosed fee. 'Mark Flekken possesses a wide range of skills that a goalkeeper in modern top-flight football needs,' Leverkusen sporting director Simon Rolfes said. 'He has strong reflexes, good control of the penalty area, and, thanks to his height of 1.95 meters, has tremendous reach. 'Mark exudes an impressive physical presence; from a footballing perspective, he has certainly been one of the best goalkeepers in the Premier League over the past two years.' The 31-year-old Flekken spent two years at Brentford, making 77 appearances for the Premier League club. 'We were expecting Mark to be our goalkeeper for many more years, however when Bayer Leverkusen made it known that they wanted to do this transfer, and Mark made it clear that he was interested in moving closer to home and with a possibility of Champions League football, we turned our attention towards how all parties could make this happen,' Brentford director of football Phil Giles said. Winnipeg Jets Game Days On Winnipeg Jets game days, hockey writers Mike McIntyre and Ken Wiebe send news, notes and quotes from the morning skate, as well as injury updates and lineup decisions. Arrives a few hours prior to puck drop. Flekken previously played in Germany with Duisburg and Freiburg, but has the chance to compete for the biggest titles with the 2024 Bundesliga champion, which has just hired former Manchester United manager Erik ten Hag as its new coach. 'To be able to contribute my qualities to a top German club with ambitious national and European goals now makes me very happy,' Flekken said. 'I love the Bundesliga and, of course, I'm also looking forward to challenging for the Champions League with the Werkself.' Liverpool goalkeeper Caoimhin Kelleher is expected to replace Flekken at Brentford. ___ AP soccer:
Cision Canada
2 hours ago
- Cision Canada
Isobloc ZÉRO - Decarbonizing construction with North America's first cement-free, insulated masonry solution Français
LANAUDIÈRE, QC, June 3, 2025 /CNW/ - Quebec-based companies Isobloc, known for its high-performance, durable insulated concrete blocks, and CarbiCrete, a world leader in decarbonized concrete, are proud to announce the launch of Isobloc ZÉRO: the first insulated masonry solution made from decarbonized concrete in North America. This 100% Quebec innovation combines thermal performance, ease of installation, and a significant reduction in greenhouse gas emissions—helping to make building construction more sustainable. Replacing cement: a high-carbon-footprint material Concrete is the most widely used construction material globally due to its affordability and durability. However, producing one of its key ingredients—cement, the binding agent—is responsible for around 8% of global CO₂ emissions, more than the entire aviation industry. By combining CarbiCrete's patented process—using steel slag and captured CO₂ to produce cement-free concrete—with Isobloc's energy-efficient insulated block system, Isobloc ZÉRO delivers the same performance as standard concrete while significantly reducing construction's carbon footprint. The Canadian construction industry is expected to reach USD 417.3 billion by 2033, making such solutions more critical than ever. "Many cities and municipalities have committed to decarbonizing construction in the coming years," says Eric Dionne, President of Isobloc. "With Isobloc ZÉRO, we're not just building walls—we're building for future generations. This is a real revolution in construction. An insulated masonry solution that's durable, easy to install… and now decarbonized." Designed and manufactured in Quebec, Isobloc ZÉRO is intended for architects, contractors, developers, and institutions looking for tangible solutions to meet new environmental standards without compromising quality or profitability. Priced comparably to conventional materials, it offers real added value, meets ASTM 90 performance standards, and contributes to certifications such as LEED, BBCA, WELL, and SmartScore. "CarbiCrete is constantly pushing the boundaries of green building," says Jacob Homiller, CEO of CarbiCrete. "By combining our cement-free concrete technology with Isobloc's energy-efficient solution, we're giving building professionals a powerful tool to reduce both embodied and operational carbon in buildings." Isobloc ZÉRO is helping drive construction toward a more sustainable, efficient, and resilient future. The product is available now directly from Isobloc.
