The dollar index (DXY00) today is down by -0.36%.  The dollar erased an overnight rally and turned lower after today's Fed-friendly US May CPI report bolstered expectations for the Fed to cut interest rates later this year.  Also, today's strength in stocks reduced liquidity demand for the dollar.  The dollar today initially moved higher after US-China trade talks ended with a plan to revive the flow of sensitive goods. 

US May CPI rose +2.4% y/y, right on expectations.  May CPI ex-food and energy rose +2.8% y/y, unchanged from April and a smaller increase than expectations of +2.9% y/y.

The markets are discounting the chances at 0% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) today is up by +0.43%.  The euro is climbing today due to weakness in the dollar.  The euro also garnered support from the ECB's higher-than-expected estimate for Q4 2025 Eurozone wage growth, a hawkish factor for ECB policy.

The ECB's wage tracker predicts Q4 2025 wage growth in the Eurozone rising +1.7% y/y, above expectations of +1.6% y/y but well below the +5.4% y/y in Q4 2024.

Swaps are discounting the chances at 13% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

USD/JPY (^USDJPY) today is down by -0.02%.  The yen recovered from a 1-1/2 week low against the dollar today and turned slightly higher after Japan's finance ministry dampened speculation that it will buy back long-term government bonds as soon as next month. Gains in the yen accelerated after T-note yields fell on a dovish US May CPI report.  The yen today initially moved lower after Japan's May PPI rose less than expected, a dovish factor for BOJ policy.

Japan May PPI eased to +3.2% y/y from +4.1% y/y in Apr, weaker than expectations of +3.5% y/y.

Japan's finance ministry dampened speculation that it will buy back long-term government bonds as soon as next month, stating that the market's speculation about Japanese government debt buybacks from July is unrealistic and not envisioned.

August gold (GCQ25) today is up +12.10 (+0.36%), and July silver (SIN25) is down -0.287 (-0.78%).  Precious metals today are mixed.  Today's weaker dollar is supportive of precious metals.  Also, today's dovish US May CPI report bolstered expectations for the Fed to cut interest rates, which boosts demand for precious metals as a store of value.  In addition, central bank demand for gold is supporting prices after the ECB reported that the share of gold in global foreign reserves rose to 20% at the end of 2024, the second largest asset in central bank reserves after the dollar. Finally, precious metals prices have continued safe-haven support from global trade tensions and geopolitical tensions in Ukraine and the Middle East.

Gains in precious metals are limited after the US-China ended trade talks with a plan to revive the flow of sensitive goods, reducing safe-haven demand for precious metals.  Precious metals were also undercut by today's hawkish statement from Japan's finance ministry that said the market's speculation about Japanese government debt buybacks from July is unrealistic.  Additionally, today's rally in stocks is curbing demand for safe-haven assets, including precious metals.