The dollar index (DXY) dropped by 0.49% today, reaching a 3-1/4 year low. This decline follows a Wall Street Journal report indicating that President Trump may expedite the announcement of the next Fed Chair, which has raised concerns about a potentially dovish Fed. In addition, US Q1 GDP was revised down to -0.5%, contrary to expectations of no change, and the May trade deficit widened to $96.6 billion, exceeding forecasts of $86.1 billion.
In labor market data, US weekly initial unemployment claims fell by 7,000 to 236,000, while continuing claims rose by 37,000 to a 3-1/2 year high of 1.974 million. Also, May capital goods new orders rose 1.7% month-over-month, surpassing expectations of 0.1% growth. Meanwhile, the euro appreciated by 0.50% against the dollar, reaching a 3-3/4 year high, despite a decline in German consumer confidence.
Richmond Fed President Barkin expressed a preference for waiting on interest rate adjustments until more clarity is achieved, reflecting the uncertainties surrounding tariffs and inflation pressures. Market expectations are currently pricing in a 25% chance of a 25 basis point rate cut after the upcoming FOMC meeting.
