The dollar index (DXY00) today is up by +0.11%.  The dollar today recovered from a 3-week low and is mildly higher. The dollar recovered early losses after President Trump said that he is considering a 10% tariff on all Chinese goods in retaliation for the flow of fentanyl from the country.  Also, dovish ECB comments today weighed on the euro to the benefit of the dollar.  Today's stock rally has curbed liquidity demand for the dollar and is limiting the dollar's gains.

US Dec leading indicators fell -0.1% m/m, right on expectations. 

The markets are discounting the chances at 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.

EUR/USD (^EURUSD) today is down by -0.08%.  The euro fell from a 2-week high and is lightly lower on dovish ECB comments.  ECB Governing Council member Escriva said another -25 bp cut in interest rates by the ECB at next week's policy meeting is "very probable."  Also, ECB Governing Council member Knot said market expectations for interest rate cuts by the ECB in January and March "are reasonable."  The euro also came under pressure after today's monthly report from the Bundesbank said, "In the first quarter of 2025, the German economy is unlikely to emerge from its long period of stagnation." 

The euro today initially moved slightly higher on hawkish comments from ECB President Lagarde that supported the euro when she said the ECB would maintain a measured approach to easing monetary policy. 

Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at its next meeting on January 30.

USD/JPY (^USDJPY) today is up by +0.41%.  The yen is sliding after today's rally in the Nikkei Stock Index to a 1-1/2 week high curbed safe-haven demand for the yen.  Also, higher T-note yields today are bearish for the yen.  Losses in the yen are contained due to expectations that the BOJ will raise interest rates on Friday.  According to swaps markets, there is a 90% chance the BOJ will raise interest rates by +25 bp on Friday, up from around 40% at the end of last month. 

February gold (GCG25) today is up +2.70 (+0.10%), and March silver (SIH25) is down -0.286 (-0.89%).  Precious metals today are mixed, with gold climbing to a 2-3/4 month high.  Dovish central bank comments today boosted demand for precious metals as a store of value after ECB Governing Council member Knot said market expectations for interest rate cuts by the ECB in January and March "are reasonable," and ECB Governing Council member Escriva said another 25 bp cut in interest rates by the ECB at next week's policy meeting is "very probable."

However, the stronger dollar today is bearish for metals.  Also, today's stock rally has reduced safe-haven demand for precious metals. Silver prices also fell on comments late Tuesday from President Trump, who said that he is considering a 10% tariff on all Chinese goods in retaliation for the flow of fentanyl from the country.  In addition, today's monthly report from the Bundesbank said the German economy was unlikely to emerge from stagnation in Q1, a bearish factor for industrial metals demand and silver prices.