The dollar index (DXY00) today is down by -0.49%.  The dollar is under pressure today because of concerns that US trade policies will lead to economic stagflation.  Losses in the dollar accelerated after the US Mar trade deficit widened to a record high, a bearish factor for Q1 GDP.

The US Mar trade deficit was a record -$140.5 billion, wider than expectations of -$137.2 billion and a negative factor for Q1 GDP.

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 +0.29%.  The euro is moderately higher today due to a weaker dollar. Also, today's upside revision to the Eurozone Apr S&P composite PMI is bullish for the euro.  Gains in the euro are limited after the Eurozone Mar PPI was weaker than expected, a dovish factor for ECB policy.  Also, political instability in Germany is negative for the euro after Fredrich Merz failed to secure parliamentary backing to become Germany's next chancellor.

Eurozone Mar PPI fell -1.6% m/m and rose +1.9% y/y, weaker than expectations of -1.4% m/m and +2.5% y/y.

The Eurozone Apr S&P composite PMI was revised upward by +0.3 to 50.4 from the previously reported 50.1.

In a sign of political instability in Germany, Fredrich Merz failed to secure a majority in a parliamentary vote to confirm him as Germany's next chancellor, the first time since World War II that an incoming chancellor failed to secure enough votes from lawmakers in the first round of voting in the Bundestag.

Swaps are discounting the chances at 96% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) today is down by -0.68%.  The yen is climbing against the dollar today as weakness in stocks due to US trade turmoil has boosted safe-haven demand for the yen.  Higher T-note yields today are limiting the upside in the yen.  Moves in the yen may be exaggerated today with Japanese markets closed for a National holiday. 

June gold (GCM25) today is up +80.30 (+2.42%), and July silver (SIN25) is up +0.941 (+2.90%).  Precious metals prices are sharply higher today, with gold posting a 2-week high and silver posting a 1-week high.  Today's weaker dollar is bullish for metals prices.  Also, the ongoing global trade turmoil caused by the US tariff policy has boosted the safe-haven demand for precious metals.  An increase in inflation expectations has boosted demand for precious metals as an inflation hedge as today's 10-year breakeven inflation rate rose to a 1-week high.  In addition, lower T-note yields today are supportive of precious metals.  Finally, 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.  Also, Israel today launched an airstrike on the Houthi-controlled airport and a power station in Sanaa, Yemen's capital, in retaliation for a Houthi missile strike against Israel last weekend.