The dollar index is down 0.12% today after the June producer price index (PPI) rose 5.5% year-over-year, below expectations of 6.2%. This weak data, along with a benign CPI report, has decreased the probability of a Federal Reserve rate hike at this month’s FOMC meeting to 11%, down from 43% earlier in the week. U.S. airstrikes against Iran, now in their fifth consecutive day, are providing some support for the dollar amid rising safe-haven demand.
In other economic news, the Empire State manufacturing survey for July showed general business conditions rose to 15.6, surpassing expectations of 9.2. Meanwhile, Eurozone May industrial production unexpectedly fell 0.2%, against forecasts for a 0.2% increase. As for interest rates, the market is pricing in a 6% chance of a 25 basis point hike from the ECB and a 2% chance from the BOJ in their upcoming meetings.
Gold prices are mixed today, with August COMEX gold up 2.60 (+0.06%). Precious metals are supported by lower dollar values and T-note yields but face pressure from rising stock prices and higher crude oil prices, which may drive inflation expectations. China’s GDP growth of 4.3% year-over-year for Q2, the slowest in 3.5 years, adds to concerns for industrial metal demand.
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