The dollar index (DXY00) today is up by +0.19%.  The dollar is climbing today as doubts about whether a ceasefire in Iran will materialize weigh on stocks and boost safe-haven demand for the dollar.  Also, today's decline in US weekly continuing unemployment claims to a 1.75-year low is a sign of a strong labor market that is hawkish on Fed policy and dollar-supportive. In addition, today's +3% surge in crude oil prices pushed inflation expectations higher and may prompt the Fed to keep monetary policy res ...

The dollar index (DXY00) on Tuesday rose by +0.42%.  The dollar moved higher on Tuesday as the ongoing war with Iran drags on, boosting safe-haven demand for the dollar.  Also, Tuesday's +4% jump in crude oil prices may stoke inflation and prompt the Fed to tighten monetary policy, a supportive factor for the dollar.  The dollar added to its gains after the Mar S&P manufacturing PMI unexpectedly increased. Gains in the dollar accelerated on Tuesday amid concerns about the escalation of the Iran war.  The ...

The dollar index (DXY00) today is up by +0.38%.  The dollar is moving higher today as the ongoing war with Iran drags on, boosting safe-haven demand for the dollar.  Also, today's +3% jump in crude oil prices may stoke inflation and prompt the Fed to tighten monetary policy, a supportive factor for the dollar.  The dollar added to its gains after the Mar S&P manufacturing PMI unexpectedly increased. US Q4 nonfarm productivity was left unrevised at +1.8%, but Q4 unit labor costs were revised upward to +4. ...

The dollar index (DXY00) fell to a 1.5-week low on Monday and finished down by -0.65%.  The dollar gave up overnight gains and turned lower as stocks rallied sharply after President Trump postponed attacks against Iranian energy infrastructure and power plants for five days following the start of talks with Iran to end the war, curbing liquidity demand for the dollar.  The dollar added to its losses on Monday amid weaker-than-expected US economic news, including the Feb Chicago Fed National Activity index ...

The dollar index (DXY00) fell to a 1.5-week low today and is down by -0.69%.  The dollar gave up overnight gains and turned lower as stocks rallied sharply after President Trump postponed attacks against Iranian energy infrastructure and power plants for five days following the start of talks with Iran to end the war, curbing liquidity demand for the dollar.  The dollar added to its losses today on weaker-than-expected US economic news, including the Feb Chicago Fed National Activity index and Jan construc ...

The dollar index (DXY00) today is down by -0.53%.  Today's stock rebound has diminished liquidity demand for the dollar.  The dollar added to its losses today after T-note yields fell, weakening the dollar's interest rate differentials. Today's US economic news was mixed for the dollar after the Feb Empire manufacturing index fell more than expected, but Feb manufacturing production and the Mar NAHB housing market index rose more than expected. More News from Barchart The US Feb Empire manufacturing su ...

Group 1: Dollar Index and Economic Indicators - The dollar index initially traded higher but fell back after President Trump's comments on the Iran war, indicating it might soon end [1] - Early support for the dollar came from a spike in oil prices above $100 per barrel, which is favorable for Fed policy and the US economy as the largest oil producer [2] - The dollar was negatively impacted by weak US economic data, including a decline of 92,000 in February payrolls and a 0.2% month-over-month decline in January retail sales [3] Group 2: Interest Rate Outlook - The outlook for interest rate differentials is poor for the dollar, with expectations of a 25 basis point cut by the FOMC in 2026, while the BOJ and ECB are expected to raise rates by at least 25 basis points [4] - Swaps markets are pricing in a 1% chance of a 25 basis point rate hike by the ECB at its next meeting [5] Group 3: Precious Metals Market - Gold prices decreased due to early strength in the dollar and reduced safe-haven demand following President Trump's comments about the Iran war [6] - Despite the decline, precious metals still have underlying support from safe-haven demand due to ongoing concerns about the US and Israeli conflict with Iran [7]

Economic Indicators - The dollar index (DXY00) increased by +0.88%, reaching a 5-week high, driven by rising oil prices and improved inflation expectations [1] - The US February ISM manufacturing index fell by -0.2 to 52.4, which was stronger than the expected 51.5, while the ISM prices paid sub-index rose by +11.5 to a 3.5-year high of 70.5, exceeding expectations of 60.0 [2] Currency Movements - The EUR/USD pair decreased by -0.91%, hitting a 5-week low, influenced by the dollar's strength and negative economic news from Germany [4] - The USD/JPY pair rose by +1.05%, with the yen falling to a 3-week low against the dollar due to rising crude oil prices and higher T-note yields [5] Market Expectations - Swaps markets are pricing in a 2% chance of a -25 basis point rate cut by the Federal Reserve at the upcoming policy meeting on March 17-18, while expectations indicate a -50 basis point cut by 2026 [3] - The European Central Bank (ECB) has a 1% chance of a -25 basis point rate cut at its next meeting on March 19 [5]

Core Insights - The dollar index fell by -0.21% due to a decline in the 10-year T-note yield, which weakened the dollar's interest rate differentials, although losses were limited by stronger-than-expected US economic reports [1] Economic Indicators - US January PPI final demand rose by +0.5% month-over-month (m/m) and +2.9% year-over-year (y/y), surpassing expectations of +0.3% m/m and +2.6% y/y [2] - The January PPI excluding food and energy increased by +3.6% y/y, exceeding expectations of +3.0% y/y and marking the largest increase in 10 months [2] - The February MNI Chicago PMI unexpectedly rose by 3.7 points to 57.7, against expectations of a decline to 52.1, indicating the fastest pace of expansion in 3.75 years [3] - December construction spending increased by +0.3% m/m, stronger than the anticipated +0.2% m/m [3] Interest Rate Expectations - The Federal Open Market Committee (FOMC) is expected to cut interest rates by approximately -50 basis points (bp) in 2026, while the Bank of Japan (BOJ) is anticipated to raise rates by +25 bp in the same year [4] - The swaps market is currently pricing in a 6% chance of a -25 bp rate cut at the next FOMC meeting on March 17-18 [3] Currency Movements - The euro rose by +0.22% against the dollar, driven by dollar weakness, although gains were limited by a weaker-than-expected German February CPI report [5] - Eurozone January ECB 1-year CPI expectations fell to 2.6%, below the expected 2.7%, while the 2-year CPI expectations remained unchanged at 2.6% [5] - The USD/JPY fell by -0.06% as the yen appreciated slightly due to dollar weakness, supported by higher Tokyo consumer prices in February [7]

Core Insights - BNY clients are hedging their dollar exposure at the highest level in over two years, indicating increased investor caution towards the U.S. currency in 2026 [1] - The hedging activity is approximately 20% larger than necessary to match changes in the value of U.S. bond and equity holdings, up from around 10% at the end of 2025 [1] - The dollar has experienced a decline, dropping over 9% in 2025, influenced by political and economic factors, including President Trump's trade policies and the Federal Reserve's stance [1] Client Behavior - The increase in hedging is primarily driven by European clients, although specific jurisdictions are not detailed [1] - Despite increased hedging, BNY's client flows do not indicate a significant shift towards selling U.S. assets, as clients have not reduced their holdings in U.S. equities and Treasuries [1] - The primary motivation for increased hedging appears to be interest rate differentials, with the Fed expected to lower borrowing costs while other central banks are raising theirs [1] Portfolio Allocation - The analysis assumes clients maintain an 80%-20% ratio of U.S. Treasuries to equities, reflecting the predominance of fixed income assets under BNY's custody [1] - Clients with a higher allocation to stocks may hedge less than the data suggests, indicating variability in hedging strategies based on portfolio composition [1]