The dollar index (DXY00) today is down by -0.40% on uncertainty over US trade policy.  President Trump said on Sunday that he had no current plans to speak to Chinese President Xi Jinping, although Mr. Trump said there could be trade deals with some US trading partners as soon as this week.  The dollar recovered from its worst level today after T-note yields rose when the US Apr ISM services index rose more than expected.

The US Apr ISM services index unexpectedly rose +0.8 to 51.6, stronger than expectations of a decline to 50.2.  Also, the Apr ISM services prices paid sub-index rose +4.2 to a 2-1/4 year high of 65.1, higher than expectations of 61.4.

The markets are discounting the chances at 2% for a -25 bp rate cut after Wednesday’s 2-day FOMC meeting.

EUR/USD (^EURUSD) today is up by +0.40%.  Today’s dollar weakness is benefiting the euro.  Also, today’s Eurozone economic news showed that the May Sentix investor confidence index rose more than expected, which supported the euro. 

The Eurozone May Sentix investor confidence index rose +11.4 to -8.1, stronger than expectations of -11.5.

Swaps are discounting the chances at 95% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) today is down by -0.81%.  The yen is climbing today on increased safe-haven demand due to concern the US-China trade war will persist after President Trump said he has no plans to talk to Chinese President Xi Jinping.  Higher T-note yields today are negative for the yen.  Moves in the yen may be exaggerated with markets in Japan closed today for the Children’s Day holiday. 

June gold (GCM25) today is up +79.80 (+2.46%), and July silver (SIN25) is up +0.241 (+0.75%).  Precious metals prices today are trading higher.  Today’s weaker dollar is bullish for metals prices.  Also, concern that the US-China trade war will persist is boosting safe-haven demand for precious metals after President Trump said he has no plans to talk with Chinese President Xi Jinping.  In addition, geopolitical risks in the Middle East continue to support safe-haven demand for precious metals as the Israel-Hamas and the US-Houthi conflicts continue.

Higher T-note yields today are limiting the upside in precious metals prices.  Also, concern that the US-China trade war will weigh on global economic growth and industrial metals demand is negative for silver prices.