The greenback index (DXY00) on Thursday rose by +0.29% and posted a 3.5-week excessive. Indicators of power within the US financial system could hold the Fed from chopping rates of interest and are supportive of the greenback. Weekly preliminary unemployment claims unexpectedly fell to a 3-month low, June retail gross sales rose greater than anticipated, and the July Philadelphia Fed enterprise outlook survey rose to a 5-month excessive. The greenback added to its features Thursday after Fed Governor Kugler mentioned it is applicable for the Fed to carry charges regular for “some time.”  Nevertheless, the greenback fell again from its finest ranges on dovish feedback from San Francisco Fed President Mary Daly, who mentioned she expects two 25 bp charge cuts this 12 months.

US weekly preliminary unemployment claims unexpectedly fell -7,000 to a 3-month low of 221,000, exhibiting a stronger labor market than expectations of a rise to 233,000.

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US June retail gross sales rose +0.6% m/m, stronger than expectations of +0.1% m/m, and Jun retail gross sales ex-autos rose +0.5% m/m, stronger than expectations of +0.3% m/m.

The US June import value index ex-petroleum was unchanged m/m, weaker than expectations of +0.2% m/m.

The US July Philadelphia Fed enterprise outlook survey rose +19.9 to a 5-month excessive of 15.9, stronger than expectations of -1.0.

The US July NAHB housing market index rose +1 to 33, proper on expectations.

Fed Governor Kugler mentioned the Fed ought to hold rates of interest on maintain “for some time,” citing the acceleration of inflation as tariffs start to spice up costs.

San Francisco Fed President Mary Daly mentioned the newest set of charge projections from Fed officers, issued in June, supplied a “reasonable outlook” in pointing to 2 25 bp charge cuts by 12 months’s finish.  She added that the Fed mustn’t wait too lengthy earlier than shifting on charges, as a result of in the event that they wait till inflation is 2%, they’ve “likely injured the economy in some way that was completely unnecessary.”

On the commerce entrance, President Trump mentioned late Wednesday that he intends to ship a tariff letter to greater than 150 international locations notifying them their tariff charges could possibly be 10% or 15%, efficient August 1, and that the group was “not big countries who don’t do that much business with the US.”  Additionally, Commerce Secretary Lutnick mentioned Nvidia might quickly resume gross sales of its much less superior H20 chips to China, and Superior Micro Gadgets obtained comparable assurances from the Commerce Division, in an indication that the US could also be within the means of negotiating a grand commerce cope with China.  Treasury Secretary Bessent is predicted to satisfy his Chinese language counterpart, Vice Premier He Lifeng, inside “the next couple of weeks” and signaled the US will doubtless prolong an August 12 deadline for the easing of sky-high tariffs.

Federal funds futures costs are discounting the probabilities for a -25 bp charge minimize at 3% on the July 29-30 FOMC assembly and 58% on the following assembly on September 16-17.

EUR/USD (^EURUSD) Thursday fell by -0.40% and posted a 3.5-week low. The greenback’s power on Thursday undercut the euro.  The euro additionally got here beneath stress on feedback from Italian Deputy Premier Tajani, who mentioned the euro is “too strong and the ECB needs to cut interest rates “to weaken the euro.

Swaps are pricing in a 1% probability of a -25 bp charge minimize by the ECB on the July 24 coverage assembly.

USD/JPY (^USDJPY) Thursday rose by +0.51%.  The yen is beneath stress on account of concern that Japanese Prime Minister Ishiba’s Liberal Democratic Celebration (LDP) might lose its majority in Sunday’s higher home election.  The guarantees by Japan’s ruling Liberal Democratic Celebration of money handouts to voters and guarantees of decrease taxes by the opposition have sparked considerations of fiscal deterioration, that are bearish for the yen.  The yen prolonged its losses after T-note yields rose.

Japanese commerce information is blended for the yen.  On the adverse facet, Japan’s June exports unexpectedly fell -0.5% y/y, weaker than expectations of +0.5% y/y.  Conversely, June imports unexpectedly rose +0.2% y/y, stronger than expectations of -1.1% y/y.

August gold (GCQ25) Thursday closed down -13.80 (-0.41%), and September silver (SIU25) closed up +0.184 (+0.48%).  Treasured metals on Thursday settled blended, with the worth of gold sliding to a 1.5-week low.  Thursday’s rally within the greenback index to a 3.5-week excessive was bearish for metals. Additionally, power in shares on Thursday has curbed safe-haven demand for treasured metals.  As well as, treasured metals got here beneath stress after President Trump mentioned he is “not planning on doing anything” to take away Fed Chair Powell.  Lastly, hawkish feedback Thursday from Fed Governor Kugler undercut treasured metals when she mentioned the Fed ought to hold rates of interest on maintain “for some time.”

Treasured metals recovered from their worst ranges Thursday, with silver shifting into optimistic territory when San Francisco Fed President Mary Daly mentioned latest Fed charge projections supplied a “reasonable outlook” in pointing to 2 25 bp charge cuts by 12 months’s finish.  Treasured metals additionally obtain safe-haven assist from world commerce tensions, following President Trump’s announcement that he intends to ship a tariff letter to greater than 150 international locations, notifying them that their tariff charges could possibly be 10% or 15%, efficient August 1.  As well as, fund shopping for of gold continues to assist costs after the quantity of gold in ETFs rose to an almost 2-year excessive on Wednesday. 

On the date of publication,

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