The dollar index (DXY00) is trading slightly higher by +0.06%. The main supportive factor is today’s +2.5 bp rise in the 10-year T-note yield, which improved the dollar’s interest rate differentials.  The dollar also has carry-over support from Fed Chair Powell’s warning last week that another rate cut in December is not a foregone conclusion.

Bearish factors for the dollar today include the weaker-than-expected US manufacturing PMI report and dovish comments from Fed Governor Miran.

Fed Governor Stephen Miran said today, “The Fed is too restrictive, neutral is quite a ways below where current policy is.”  He added, “Given my rather more sanguine outlook on inflation than some of the other members of the committee, I don’t see a reason for keeping policy as restrictive.”  Mr. Miran recently took a leave of absence from the White House Council of Economic Advisers to take a temporary job as a Governor at the Fed.

The dollar is still under pressure from the ongoing US government shutdown.  The longer the shutdown is maintained, the more likely the US economy will suffer and the more likely the Fed will have to cut interest rates.

The markets are discounting a 66% chance that the FOMC will cut the fed funds target range by 25 bp at the next FOMC meeting on December 9-10.

As a bearish factor for the dollar, the Oct ISM manufacturing index fell by -0.4 points to 48.7, weaker than expectations for a +0.4 point rise to 49.5.  On a more favorable note, the Oct ISM prices paid index fell -3.9 points to 58.0, weaker than expectations of +0.6 to 62.5.

As a supportive factor for the dollar, the final-October S&P US manufacturing PMI was revised slightly higher by +0.3 points to 52.5, stronger than market expectations for an unrevised 52.2.

EUR/USD (^EURUSD) is down -0.15%, undercut by mild strength in the dollar. 

Central bank divergence is supportive of the euro, with the ECB seen as finished with its rate-cut cycle while the Fed is expected to cut rates by at least another percentage point by the end of 2026.

The final-Oct HCOB Eurozone manufacturing PMI was unrevised at 50.0, in line with market expectations.

Swaps are pricing in a 6% chance of a -25 bp rate cut by the ECB at the December 18 policy meeting.

USD/JPY (^USDJPY) today is little changed, consolidating below last Thursday’s 8.5-month high.  The yen has recently been weak due to Japanese political uncertainty and a delayed BOJ rate hike. 

December COMEX gold (GCZ25) is up +49.7 (+0.99%), and December COMEX silver (SIZ25) is up +0.25 (+0.53%).

Precious metals prices are seeing some support today as prices stabilize after the sharp sell-off seen in the second half of October.  However, bearish factors for precious metals prices today include a slightly stronger dollar and slightly higher 10-year T-note yields.   Today’s weaker-than-expected US PMI report undercut silver and industrial metals prices.

Gold prices saw support last Thursday from the World Gold Council’s report that global central banks purchased 220 MT of gold in Q3, up +28% from Q2. 

Precious metals have underlying safe-haven support due to the ongoing US government shutdown, uncertainty over US tariffs, geopolitical risks, central bank buying, and political pressure on the Fed’s independence. 

Since posting record highs in mid-October, long liquidation pressures have weighed on precious metals prices.  Holdings in gold and silver ETFs have recently fallen after posting 3-year highs on October 21.