The dollar index (DXY) rose by 0.50% today, driven by increased liquidity demand amid stock market weakness and the ongoing conflict in Iran, which has heightened safe-haven demand. Additionally, Federal Reserve Chair Powell indicated that a rate cut is unlikely unless progress is made on inflation, contributing to a strengthened dollar.
In economic data, the German producer price index (PPI) for February fell 3.3% year-over-year, the largest decline in 1.75 years, and worse than the expected 2.7%. The European Central Bank’s member Joachim Nagel signaled that interest rates may need to increase next month if inflation persists. Currently, swaps markets reflect a 78% probability of a 25 basis point rate hike by the ECB at their April 30 meeting.
In commodity markets, April COMEX gold is down 0.58%, and May COMEX silver is down 2.95%, as a stronger dollar and rising global bond yields exert downward pressure on prices. Gold ETF holdings fell to a 2.5-month low, while silver ETF holdings dropped to a 6-month low, with ongoing geopolitical uncertainty and high energy costs impacting precious metals demand.
