US dollar weakens as market consolidates gains, but uptrend intact

NEW YORK, April 17 – The dollar on Wednesday fell for the first time in six days, as investors consolidated gains after Federal Reserve officials repeated the interest rate-cutting cycle is on hold pending new economic data, while the monetary easing outlook for other major central banks remained unchanged.

The greenback also dropped from 5-1/2-month highs hit on Tuesday. The dollar index was last down 0.4% at 105.89. So far this year, the index has gained about 4.7%.

“I see today’s move as more of a slight correction than anything. To put things into context, the dollar spot index is still just off its highest point since mid-November,” said Helen Given, FX trader at Monex USA in Washington.

“(Fed Chair Jerome) Powell’s panel yesterday was the big market-mover for the week, and now traders appear to be hedging on the other side of the market, so we’re seeing this pullback today. We’re reaching a point where markets have priced in the downshift on cuts from the Fed, so flows are a bit more normalized.”

Top US central bank officials, including Powell on Tuesday, have provided little indication of when rates may be cut, saying instead that monetary policy needs to be restrictive for longer.

Recent data showed the US economy remains stronger than expected, leading investors to reduce their bets on future rate cuts. This was again evident in the Fed’s latest so-called “Beige Book” released on Wednesday. The report indicated US economic activity expanded slightly from late February through early April and companies signaled they expect inflation pressures to hold steady.

Meanwhile, risks of a broadening Middle East conflict have added to the dollar’s safe-haven appeal in the short term.

After last week’s hotter-than-expected reading of US consumer prices, the market has reduced the number of quarter-point rate cuts expected by the Fed this year to less than two. The first is now seen in September, later than a prior June, according to LSEG’s rate app.

A more hawkish view from the Fed has led Treasury yields to move higher and strengthened the dollar’s outlook.

“If for no other reason than the Fed will keep rates elevated, that will attract flows into the US,” said Thierry Wizman, global FX & rates strategist at Macquarie in New York, adding that greater volatility across markets due to higher yields could prompt a flight to quality into the dollar.

In addition, US economic data, unlike China and Europe, is still fairly robust, Wizman added.

Against the yen, the dollar fell 0.3% to 154.32 yen. Part of the decline came after finance leaders from the United States, Japan and South Korea agreed to consult closely on foreign exchange markets in their first trilateral meeting on Wednesday. The statement acknowledged concern by Tokyo and Seoul over their currencies’ recent sharp declines.

“I see a statement like that as both unusual and priming the ground for an intervention from Japanese currency officials rather imminently,” Monex’s Given said. “I could see concrete steps from Japanese authorities as soon as by the end of this week.”

The dollar hit 154.79 yen on Tuesday, its weakest in 34 years.

Market participants raised the bar of a possible intervention by Japanese authorities to prop up the yen, now mentioning the 155 level from the previous 152, even if they believed Japan could step in at any time.

They also believe as long as the yen’s fall is gradual and led by fundamentals, the probability of a Japan intervention is low.

Japan last intervened in the currency market in 2022, spending an estimated USD 60 billion to defend the yen.

Hedge funds have built up their biggest bet against the yen in 17 years, raising the prospect that when Japan’s embattled currency does rebound, the short-covering rally could be a powerful one.

In other currencies, the euro rose 0.5% to USD 1.0667.

European Central Bank policymakers continued to make the case for a rate cut in June on Tuesday as inflation remains on course to ease back to 2% by next year, even if the path for prices still proves bumpy.

(Reporting by Herbert Lash and Gertrude Chavez-Dreyfuss; Additional reporting by Stefano Rebaudo in Milano and Ankur Banerjee in Singapore; Editing by Sam Holmes, Jacqueline Wong, Will Dunham, Ros Russell, Alex Richardson, Deepa Babington, and Jonathan Oatis)

Gold retreats as dimming rate cut expectations overshadow safe haven demand

April 17 – Gold prices edged down on Wednesday, but traded near their record high levels hit last week, as pressure from fading US rate cut hopes overshadowed gains from safe haven demand arising out of geopolitical turmoil in the Middle East.

Spot gold eased 0.2% to USD 2,376.39 per ounce, as of 2:15 p.m. ET (1815 GMT). Prices hit an all-time high of USD 2,431.29 on Friday.

US gold futures settled 0.8% lower at USD 2,388.4.

“Geopolitical uncertainty continues to support gold and if there is any escalation in the situation, then prices could move towards the USD 2,500 range,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

“Gold prices will only come lower if central banks stop buying or if investors go back to a risk-on phase,” he said.

Iran said its military was ready to confront any attack by Israel. Iran carried out its first-ever direct attack on Israel last weekend in retaliation for a suspected Israeli strike on an Iranian diplomatic compound in Damascus on April 1.

Top US central bank officials including Federal Reserve Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, saying instead that monetary policy needs to be restrictive for longer.

The market is pricing in a 71% chance of a US rate cut by September. Higher interest rates reduce the appeal of holding non-yielding gold.

While gold has largely remained uncorrelated with the US dollar and Treasury yields in the current trend, it may still show short-term responses to movements in both, said FXTM senior research analyst Lukman Otunuga.

Spot silver rose 1.1% to USD 28.39.

The global silver deficit is expected to rise by 17% to 215.3 million troy ounces in 2024 due to a 2% growth in demand led by robust industrial consumption and a 1% fall in total supply, the Silver Institute said.

Spot platinum fell 1.5% to USD 942.79 and palladium rose 1.4% at USD 1,027.56.

(Reporting by Ashitha Shivaprasad, Harshit Verma, and Anjana Anil in Bengaluru; Editing by Vijay Kishore and Shailesh Kuber)

Oil settles down 3% as demand worries outweigh Middle East supply risks

April 17 – Oil prices settled down 3% on Wednesday, pressured by a rise in US commercial inventories, weaker economic data from China, and US progress on Ukraine and Israel aid bills.

Brent futures for June settled down USD 2.73, or 3%, at USD 87.29 a barrel, while US crude futures for May settled down USD 2.67 or 3.1% at USD 82.69 a barrel, their biggest fall since March 20.

Oil prices have softened this week as economic headwinds curb gains from geopolitical tensions, with markets eying how Israel might respond to Iran’s weekend attack.

Analysts do not expect Iran’s unprecedented missile and drone strike on Israel to prompt dramatic US sanctions on Iran’s oil exports.

US crude inventories rose by 2.7 million barrels to 460 million barrels last week, government data showed, nearly double analysts’ expectations in a Reuters poll for a 1.4 million-barrel build.

Oil prices continued to decline after US House of Representatives Speaker Mike Johnson said the text of four bills providing assistance to Ukraine, Israel, and the Indo-Pacific would be filed “soon today,” with a fourth with “other measures to confront Russia, China and Iran” posted later in the day.

“The market was waiting to sell off on indications of calming of tensions in the Middle East … progress on these bills and a three-day delay in Israel’s response to Iran is helping today,” said John Kilduff, partner at Again Capital LLC in New York.

Top Federal Reserve officials including Chair Jerome Powell backed away on Tuesday from providing any guidance on when interest rates may be cut, dashing investors’ hopes for meaningful reductions in borrowing costs this year.

Britain’s inflation rate slowed by less than expected in March, signaling that a first rate cut by the Bank of England could also be further off than previously thought.

However, inflation slowed across the eurozone last month, reinforcing expectations for a European Central Bank rate cut in June.

“A strengthening trend in the US dollar and the ability of crude stocks to increase in the face of reduced Mexican imports and increasing SPR refills are also sending off some bearish vibes,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

In China, the world’s biggest oil importer, the economy grew faster than expected in the first quarter, but several other indicators showed that demand at home remains frail.

Elsewhere, Tengizchevroil announced plans for scheduled maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May.

(Reporting by Laura Sanicola in Washington; Additional reporting by Deep Vakil in Bengaluru, Ahmad Ghaddar in London, Yuka Obayashi in Tokyo, and Trixie Yap in Singapore; Editing by Marguerita Choy, Richard Chang, and Matthew Lewis)

Oil prices rise as Israel weighs response to Iran attack

April 16 – Oil prices rose on Tuesday amid heightened tensions in the Middle East after Israel’s military chief said his country would respond to Iran’s weekend missile and drone attack amid calls for restraint by allies.

Brent futures for June delivery rose 46 cents, or 0.5%, to USD 90.56 a barrel by 0005 GMT. US crude futures for May delivery rose 43 cents, or 0.5%, to USD 85.84 a barrel.

Oil prices had ended Monday’s session lower after Iran’s weekend attack on Israel proved to be less damaging than anticipated, initially easing concerns of a quickly intensifying conflict that could displace crude barrels.

The attack, which Iran called retaliation for an air strike on its Damascus consulate, caused only modest damage, with missiles shot down by Israel’s Iron Dome defense system.

But Israel’s Prime Minister Benjamin Netanyahu on Monday summoned his war cabinet for the second time in less than 24 hours to weigh how to react to Iran’s first-ever direct attack on Israel, a government source said. That raised market concerns that retaliatory measures could impact oil supply.

Iran produces more than 3 million barrels per day of crude oil as a major producer within the Organization of the Petroleum Exporting Countries (OPEC).

The benchmarks had risen on Friday in anticipation of Iran’s retaliatory assault, with prices soaring to their highest since October.

In China, the world’s biggest oil importer, official gross domestic product figures due on Tuesday are expected to show growth slowed to 4.6% year-on-year from 5.2% in the previous three months. That would maintain pressure on policymakers to unveil more economic stimulus measures that could boost oil prices.

(Reporting by Laura Sanicola in Washington; Editing by Jamie Freed)

Funds make biggest bet against yen since 2007: McGeever

ORLANDO, Florida, April 15 – Hedge funds have built up their biggest bet against the yen in 17 years, raising the prospect that when Japan’s embattled currency does rebound from its 34-year low against the dollar, the short-covering rally could be a powerful one.

The latest Commodity Futures Trading Commission data show that speculators’ net short yen position is the largest since June 2007, and one of the biggest since yen futures contracts were launched in 1986.

The yen is down nearly 9% against the dollar since Jan. 1, making it the worst-performing G10 currency this year. The Swiss franc is down almost as much, but the Swiss National Bank has cut interest rates whereas the Bank of Japan has raised them.

With yen positions so stretched, it might not take much to prompt funds to trim them back and cash in.

As the threat of yen-buying intervention from Tokyo rises the higher dollar/yen goes, and with the potential for safe-haven demand following the latest flare-up in Middle East tensions suddenly in the mix too, traders short of yen will be on edge.

But right now yen-selling momentum is strong and if you’re on the right side of the trade, the trend is very much your friend.

“The leveraged community has the bit between the teeth, is earning carry and capturing gains, in the face of a finance minister who is big on watching the FX market and short on action,” Societe Generale’s Kit Juckes wrote on Monday.

“We think the yen is very oversold here, but decades of overshoots tell us to be patient,” he added.

In the week through April 9, CFTC funds increased their net short yen position to 162,151 contracts, the biggest net short in 17 years. In dollar terms it is a USD 13.4 billion leveraged bet against the yen, the largest since February 2018.

A long position is essentially a bet that an asset will rise in value, and a short position is a wager its price will fall.

Funds have increased their net short yen position in 11 of the last 13 weeks, the two outliers being in the run-up to the BOJ’s historic interest rate hike in March.

The value of CFTC funds’ yen position accounts for 60% of their aggregate USD 21.9 billion long dollar position against G10 currencies, the most bullish bet on the greenback since late 2021.

Given the dramatic repricing of the US interest rate outlook recently and sharp rebound in US bond yields, the migration to the dollar is unsurprising. The Fed’s relative hawkishness is making the dollar the only game in town.

But Steve Barrow at Standard Bank in London cautions against over-optimism, and suggests Japanese intervention would not only send the dollar spiraling lower against the yen, but more broadly too.

“It is worth remembering that intervention by the BOJ back in September/October 2022 appeared to spark a more general decline in the dollar against other currencies. This is another reason why we have not lifted our forecasts for the dollar materially,” he wrote in a note on Monday.

(The opinions expressed here are those of the author, a columnist for Reuters)

(By Jamie McGeever; Editing by Jonathan Oatis)

China GDP eyed as investor sentiment crumbles

April 16 – Asian markets open on Tuesday against an extremely challenging backdrop of slumping global equity and bond prices, a rising dollar, and the yen’s slide to lows that many analysts reckon will prompt direct intervention from Japanese authorities.

US and world stocks fell to two-month lows – the S&P 500 chalked up its biggest two-day decline in over a year – as the 10-year US Treasury yield and dollar index made fresh 2024 highs.

That’s a tightening of financial conditions that will only weigh on Asian markets. Goldman Sachs’ aggregate emerging market financial conditions index hit a five-month high on Friday, and almost certainly rose further on Monday.

It is the backdrop against which China releases top-tier economic data including March industrial production, retail sales, fixed asset investment, and house prices, which will all be wrapped up in first-quarter GDP growth figures.

Chinese stocks rallied on Monday after the securities regulator on Friday issued draft rules to improve the market and protect investors’ interests, but that momentum is unlikely to last.

Recent economic data have fallen short of expectations, most notably trade, which saw a sharp contraction in exports, and credit growth, which hit a record low on a broad basis.

China’s property crisis remains front of mind too, after state-backed developer China Vanke said it was facing short-term liquidity pressure and operational difficulties. The firm’s Hong Kong-listed shares hit a record low on Monday.

Tuesday’s official figures are expected to show China’s growth slowed to 4.6% year-on-year from 5.2% in the previous three months, maintaining pressure on policymakers to unveil more stimulus measures.

That would be the slowest rate of expansion since the first quarter of 2023.

China’s growth will figure highly in discussions between US Treasury Secretary Janet Yellen and Chinese officials on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington this week.

China’s central bank on Monday fixed the yuan at its weakest level against the dollar since March 25. The onshore yuan hit a five-month low close to 7.24 per dollar, just inside its daily trading band limit.

There are no such overt limits on Japan’s yen, of course, and even if there were, the currency’s relentless slide this year would probably have smashed them anyway.

Once again, FX traders will be on high alert for yen-buying intervention from Japanese authorities after the yen slumped to a new 34-year low through 154.00 per dollar on Monday. It is the worst-performing G10 and main Asian currency this year.

Tokyo hasn’t acted yet, but if it does, the yen’s reversal could be powerful – hedge funds are sitting on their largest net short yen position in 17 years.

Here are key developments that could provide more direction to markets on Tuesday:

– China GDP (Q1)

– China industrial production, retail sales, investment, house prices (March)

– Indonesia consumer confidence (March)

(By Jamie McGeever; editing by Josie Kao)

10-year yields at highest since November following strong retail sales data

NEW YORK, April 15 – Yields on benchmark US 10-year Treasuries hit five-month highs on Monday after stronger-than-expected retail sales data from March suggested the Federal Reserve could delay cutting interest rates this year.

The hotter-than-expected reading – in which retail sales rose 0.7% last month, more than double the 0.3% expected by economists polled by Reuters – followed data last week that suggested inflation remains stickier than markets had expected.

Futures markets are now pricing in 44 basis points in rate cuts by the end of December, down from more than 160 basis points in expected cuts at the start of the year. Markets now expect the first rate cut to come in September, according to CME’s FedWatch Tool.

“The market narrative has shifted to this idea of ‘How can the Fed really cut when the economy is moving along this strong?’,” said Charlier Ripley, senior investment strategist for Allianz Investment Management.

Yields had risen earlier in the session on concerns that supply chains would slow and energy prices would jump following Iran’s drone and missile attack on Israel on Saturday.

“The escalation of the conflict in the Middle East has contributed further to the inflationary angst that is defining the US rates market at the moment,” said Ian Lyngen, head of US rates strategy at BMO Capital Markets. “The stickiness of realized inflation demonstrated via the Q1 data has only served to reinforce concerns that there is another leg higher in the offing.”

The yield on 10-year Treasury notes was up 12.9 basis points at 4.628%. The yield on the 30-year Treasury bond was up 13.5 basis points at 4.739%.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 5.3 basis points at 4.935%, but remains slightly below its highs from last week.

Comments by New York Federal Reserve President John Williams, who said in a Bloomberg TV interview Monday morning that inflation is not at a turning point and that he still sees rate cuts this year, helped limit the sell-off.

A weaker-than-expected reading in the New York Fed’s Empire State Manufacturing Index and an unchanged reading of homebuilder confidence after four months of gains also offered support for Treasuries.

(Reporting by David Randall; Editing by Chizu Nomiyama and Jonathan Oatis)

Dollar jumps, yen weakest since 1990 after strong US retail sales

NEW YORK, April 15 – The dollar reached its highest since early November against a basket of currencies on Monday and sent the yen to its lowest level since 1990, after US retail sales increased more than expected in March.

Retail sales rose 0.7% last month and data for February was revised higher to show sales rebounding 0.9% instead 0.6% as previously reported. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rising 0.3% in March.

The greenback has gained as still sticky inflation and strong growth lead investors to push back expectations on when the Federal Reserve is likely to begin cutting rates. The US central bank is also now expected to make fewer cuts than previously.

“US data just keeps coming better and better than expected,” said Brad Bechtel, global head of FX at Jefferies in New York.

Traders are now pricing in fewer than two 25 basis points cuts by year-end, after previously expecting three.

New York Fed President John Williams said on Monday that Fed policy was in a good place and remained restrictive, adding that his own view was that interest rate cuts would likely begin this year.

The Japanese yen in particular has suffered from US dollar strength and the large interest rate differential between the two countries.

Japanese monetary officials have ramped up warnings that they may intervene to shore up the currency. Finance Minister Shunichi Suzuki said on Monday he was watching currency moves closely, repeating that Tokyo is “fully prepared” to act.

Bechtel sees any potential intervention as more likely if the yen is underperforming, rather than during episodes of broad-based dollar strength.

“I think we still need a big day of yen really underperforming the market by 1% or more,” he said, adding that Japanese officials might also step in at a key level such as 155.

The dollar was last up 0.59% against the Japanese currency at 154.19, after getting as high as 154.45.

The dollar index reached 106.23, the highest since Nov. 2, and was last up 0.24% at 106.20.

Investors are also focused on escalating tensions in the Middle East, which are seen as increasing demand for the safe haven US dollar.

Israel faced growing pressure from allies on Monday to show restraint and avoid an escalation of conflict in the Middle East as it considered how to respond to Iran’s weekend missile and drone attack.

The euro fell as low as USD 1.0622, the weakest since Nov. 3, and was last down 0.18% at USD 1.0623.

The single currency recorded its biggest weekly percentage drop since late September 2022 last week as the European Central Bank left the door open to a rate cut in June.

The Australian dollar also dropped to USD 0.6441, the lowest since Nov. 14.

In cryptocurrencies, Bitcoin fell 6.24% to USD 62,950.00. It reached USD 61,323 on Saturday, the lowest since March 20.

(Reporting By Karen Brettell; Editing by Alex Richardson and Sharon Singleton)

Gold firms despite stronger dollar as geopolitical concerns mount

April 15 – Gold prices climbed on Monday due to safe-haven demand spurred by Middle East tensions, even as the dollar and Treasury yields gained following a higher-than-expected uptick in US retail sales in March, feeding apprehensions that the Federal Reserve could delay cutting interest rates this year.

Spot gold rose 0.9% to USD 2,365.09 per ounce as of 2:00 p.m. ET (1800 GMT), after hitting a record high of USD 2,431.29 on Friday in anticipation of Iran’s retaliatory attack against Israel.

US gold futures settled 0.4% higher at USD 2,383.

This very much seems like a geopolitically driven price move, which might be related to statements from the Israeli defense forces that something is going to materialize here, said Bart Melek, head of commodity strategies at TD Securities.

Iran launched explosive drones and missiles late on Saturday in the first attack on Israel by another country in over three decades, stoking fears of a broader regional conflict.

The dollar rose 0.2% and 10-year Treasury yields hit a five-month high after data showed US retail sales increased more than expected in March, further evidence that the economy had ended the first quarter on solid ground.

The market now sees fewer than two 25-basis-point cuts by the year-end, after previously expecting three.

However, “in the near-term, gold prices could fall towards USD 2,200 as the geopolitical premiums get washed out,” said Daniel Pavilonis, senior market strategist at RJO Futures.
Central bank buying has also lent support to bullion.

“It is unlikely that there will be a wholesale reversal to net selling in the near term despite the record gold price, as central bank buying tends to be strategic and insensitive to the price,” analysts at Heraeus said in a note.

Meanwhile, spot silver rose 3% to USD 28.72 after hitting a nearly three-year high in the previous session.

“Both industrial demand – mainly from solar PV manufacturing – and institutional investing appear to be supporting” silver, Heraeus analysts said.

Platinum fell 0.6% to USD 968.00 and palladium lost 2% to USD 1,028.34.

(Reporting by Ashitha Shivaprasad and Anjana Anil in Bengaluru; Editing by Pooja Desai and Ravi Prakash Kumar)

European stocks kick off week on cautious note amid geopolitical tensions

April 15 – European shares inched up on Monday, with defense stocks among top gainers, as investors assessed the wider implications of escalating tensions in the Middle East, while optimism around imminent interest rate cuts also aided sentiment.

The pan-European STOXX 600 gained 0.1%, led by the defense sector that was up 0.6% by 0713 GMT, after Iran launched explosive drones and missiles at Israel over the weekend in retaliation for a suspected Israeli attack on its consulate in Syria on April 1.

Among top movers, Temenos jumped 15.6% after the Swiss software firm said a “special committee” formed by its board found that accusations in a report by Hindenburg Research were incorrect and misleading.

Ageas climbed 3.6% as France’s BNP Paribas said it had reached an agreement with China’s Fosun Group to acquire its 9% stake in the Belgian insurer for around 730 million euros (USD 777.60 million).

Adidas rose 3.5% after brokerage Morgan Stanley double-upgraded the German sportswear maker to “overweight” from “underweight”.

(Reporting by Ozan Ergenay and Johann M Cherian; Editing by Sohini Goswami)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Monthly Economic Update: Fed cuts incoming

Consensus Pricing – June 2025