The dollar index (DXY00) today is down by -0.02%.  The dollar today is seeing downward pressure from weaker-than-expected US housing starts and building permits reports and from an unexpected decline in the University of Michigan US May consumer sentiment index to a 3-year low. Also, lower T-note yields today are undercutting the dollar.  In addition, strength in stocks today has reduced liquidity demand for the dollar. 

The dollar recovered from its worst levels after the University of Michigan US May inflation expectations unexpectedly rose, a hawkish factor for Fed policy.  Also, positive comments from Atlanta Fed President Bostic supported the dollar when he said he expects the US economy to slow this year but not fall into recession. 

US Apr housing starts rose +1.6% m/m to 1.361 million, weaker than expectations of 1.364 million. Also, Apr building permits, a proxy for future construction, fell -4.7% m/m to 1.412 million, weaker than the consensus of 1.450 million.

The US Apr import price index ex-petroleum rose +0.4% m/m, stronger than expectations of +0.1% m/m and the biggest increase in a year.

The University of Michigan US May consumer sentiment index unexpectedly fell -1.4 to a 3-year low of 50.8, weaker than expectations of an increase to 53.4. 

The University of Michigan US May 1-year inflation expectations jumped to a 43-year high of 7.3%, higher than expectations of no change at 6.5%.  Also, the May 5-10-year inflation expectations rose to a 34-year high of 4.6%, higher than the expectations of no change at 4.4%.

Atlanta Fed President Bostic said he expects the US economy to slow this year but not fall into recession, and he sees a "one rate cut this year" amid economic uncertainty and tariffs putting upward pressure on inflation.

The markets are discounting the chances at 8% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) today is up by +0.01%.  The euro today is slightly higher due to weakness in the dollar. Also, hawkish comments today from ECB Governing Council member Kazaks boosted the euro when he said ECB interest rate cuts are nearing their endpoint.

ECB Governing Council member Kazaks said ECB interest rate cuts are nearing their endpoint as "we are relatively close to the terminal rate already" if the base case for inflation returning to 2% this year materializes."

Swaps are discounting the chances at 91% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) today is up by +0.10%.  The yen is under pressure today after Japan's Q1 GDP contracted more than expected.  Also, dovish comments today from BOJ Board member Nakamura weighed on the yen when he warned against the BOJ rushing to raise interest rates.

Losses in the yen are limited today due to a decline in T-note yields.  Also, today's upward revision to Japan's Mar industrial production supported the yen. 

Japan's Q1 GDP fell -0.7% (q/q annualized), weaker than expectations of -0.3%.  The Q1 deflator rose +3.3% y/y, higher than expectations of +3.2% y/y.

Japan Mar industrial production was revised upward to +0.2% m/m from the previously reported -1.1% m/m. 

BOJ Board member Nakamura warned against rushing to raise the benchmark interest rate as policymakers will need to closely monitor the impact of US tariffs on economic activity. 

June gold (GCM25) today is down -43.90 (-1.36%), and July silver (SIN25) is down -0.345 (-1.06%).  Precious metals today are sharply lower.  Reduced safe-haven demand for precious metals is weighing on prices as Ukraine and Russia begin direct talks to end the war for the first time in three years.  Also, fund liquidation of long gold positions continues to weigh on prices due to the easing of US-China trade tensions after China and the US agreed to reduce tariffs on each other's goods this past weekend.  Long gold positions in ETFs fell to a 5-week low on Thursday.  In addition, today's stock rally has curbed safe-haven demand for precious metals.

Precious metals recovered from their worst levels today after the University of Michigan US May inflation expectations unexpectedly increased, which boosts demand for precious metals as an inflation hedge.  Also, lower global bond yields today are a bullish factor for precious metals.  In addition, geopolitical risks in the Middle East continue to support safe-haven demand for precious metals as the Israel-Hamas conflict continues and as Israel recently launched an airstrike on Houthi rebels in Yemen.

Silver prices are also under pressure today on signs of weakness in industrial metals demand after US Apr housing starts and building permits fell more than expected.  Also, Japan's Q1 GDP contracted more than expected, a bearish factor for industry metals demand.