Dollar Edges Lower on Waning US Consumer Confidence
The US Jan S&P CoreLogic composite-20 home price index rose +4.67% y/y, below expectations of +4.80% y/y but the fastest pace of increase in 5 months.
US Feb new home sales rose +1.8% m/m to 676,000, weaker than expectations of 680,000.
The Conference Board's US Mar consumer confidence index fell -7.2 to a 4-year low of 92.9, weaker than expectations of 94.0.
The US Mar Richmond Fed manufacturing survey of current conditions fell -10 to -4, weaker than expectations of 1.
Fed Governor Kugler said she is "paying close attention to the acceleration of price increases and higher inflation expectations, especially given the recent bout of inflation in the past few years," and she supports holding interest rates steady for "some time."
This week's attention will focus on Wednesday's report on Feb capital goods new orders nondefense ex-aircraft and parts (expected +0.2% m/m). On Thursday, Q4 GDP is expected to be unrevised at +2.3% (q/q annualized), and Mar pending home sales are expected +1.0% m/m. On Friday, Feb personal spending is expected +0.5% m/m, and Feb personal income is expected +0.4% m/m. Also, the Feb core PCE price index, the Fed's preferred inflation gauge, is expected +0.3% m/m and +2.7% y/y. Finally, on Friday, the revised Mar University of Michigan consumer sentiment index is expected to remain unchanged at 57.9.
The markets are discounting the chances at 16% for a -25 bp rate cut after the May 6-7 FOMC meeting.
EUR/USD (^EURUSD) Tuesday fell by -0.07%. The euro gave up an early advance Tuesday and fell to a 2-1/2 week low on dovish comments from ECB Governing Council member Villeroy de Galhau, who said the disinflation trend in Europe is "solid" and the ECB has scope for further interest rate cuts.
The euro Tuesday initially moved higher and garnered support after the German Mar IFO business climate survey rose to an 8-month high. Also, hawkish comments Tuesday from ECB Governing Council members Kazimir and Muller boosted the euro when they said they could not rule out a pause to the ECB's interest rate cuts.
Eurozone Feb new car registrations fell -3.4% y/y to 854,000 units, the largest decline in 5 months.
The German Mar IFO business climate survey rose +1.4 to an 8-month high of 86.7, right on expectations.
ECB Governing Council member Villeroy de Galhau said the ECB has scope for further interest rate cuts due to a "solid trend" of disinflation in Europe.
ECB Governing Council member Kazimir said the ECB "is already now in the neutral rate zone," and he can't rule out a pause in interest rate cuts.
ECB Governing Council member Muller said he "can't rule out a pause in the ECB's rate cutting," and any further rate cuts will depend on the nature of the tariffs that the US is due to announce soon.
Swaps are discounting the chances at 69% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
USD/JPY (^USDJPY) Tuesday fell by -0.53%. The yen recovered from a 3-week low against the dollar Tuesday and posted moderate gains. Higher Japanese government bond yields have strengthened the yen's interest rate differentials and are supporting the yen after the 10-year JGB bond yield climbed to a 16-year high Tuesday of 1.587%. Gains in the yen accelerated after T-note yields gave up an early advance and turned lower.
April gold (GCJ2 5) Tuesday closed up +10.30 (+0.34%), and May silver (SIK2 5) closed up +0.737 (+2.20%). Precious metals settled moderately higher on Tuesday due to a weaker dollar. Precious metals also have support on hopes that US reciprocal tariffs scheduled for April 2 would be more targeted than previously expected, which eases concerns about inflation and could allow the Fed to keep cutting interest rates, a dovish factor for precious metal. Tuesday's slump in US March consumer confidence to a 4-year low is a dovish factor for Fed policy and bullish for precious metals. Ramped-up geopolitical risks in the Middle East are also boosting safe-haven demand for precious metals as Israel continues airstrikes across Gaza, ending a two-month ceasefire with Hamas, and as the US continues to launch strikes on Yemen's Houthi rebels. In addition, fund buying of gold supports prices after long gold positions in ETFs rose to a 17-month high Monday.
Hawkish central bank comments Tuesday were bearish for precious metals. Fed Governor Kugler said she supports holding interest rates steady for "some time." Also, ECB Governing Council members Kazimir and Muller said they cannot rule out a pause in the ECB's interest rate cuts.
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Canada News.Net
a day ago
- Canada News.Net
Wall Street divided as week ends
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Winnipeg Free Press
a day ago
- Winnipeg Free Press
Trump appointees pushed more marble in Fed building renovation White House now attacks
WASHINGTON (AP) — President Donald Trump has looked to the marble finishes and hefty price tag of the Federal Reserve headquarters to claim grounds to fire Chair Jerome Powell, with whom he has tussled for years over interest rates. But the extensive use of marble in the building is, at least in part, the result of policies backed by Trump himself. As the Fed moved forward with plans to renovate its Great Depression-era headquarters in Washington during Trump's first term, it faced concerns in 2020 during a vetting process involving Trump appointees, who called for more 'white Georgia marble' for the facade of building. The Fed's architects said the central bank had wanted glass walls to reflect the Fed as a transparent institution, but three Trump appointees to a local commission felt marble best fit the building's historic character. Marble was added as a result, according to the minutes of the Commission of Fine Arts, which advises the federal government on architecture. The marble does not explain the roughly $600 million in cost overruns for the Fed headquarters and another nearby office building, now budgeted to cost $2.5 billion, which also includes the addition of an underground parking garage and new glass atria in the building's courtyards. But the roots of its extensive use further muddies the White House's attempts to use the renovation to paint the central banker as profligate spender as a possible pretext to removing him. 'I wouldn't be surprised if the result costs more' because of the added marble, said Alex Krieger, a Harvard University emeritus professor who was a member of the commission and participated in hearings on the Fed's proposal. Russ Vought, Trump's top budget adviser, cited 'premium marble' in a letter to Powell last week as an example of the 'ostentatious overhaul.' In a response late Thursday, Powell wrote that the project would 'use new domestic marble' for several reasons, including 'to address concerns raised by external review agencies.' The National Capital Planning Commission, which also reviewed and approved the Fed renovation project, has started an inquiry into how Powell oversaw the updates. 'The Federal Reserve's extravagant multi-billion dollar renovation happened on the watch of the Fed's leadership, and the Fed's leadership needs to own up for this mismanagement of taxpayer dollars – as well as its botched coverup job,' said White House spokesman Kush Desai. A Fed spokesperson declined to comment. There is an uncomfortable possibility that the fate of the U.S. central bank and its foundational role in the economy hinges on a dispute about renovation costs and architecture, one that could lead a broader legal battle as to whether Trump can dismiss a Fed chair he dislikes after the Supreme Court in May described the institution as having protections against an abrupt firing. Trump White House investigating renovation Trump, who has redecorated the Oval Office in gold leaf, has argued that inflation is not a concern, so the Fed can dramatically slash its rate to encourage more borrowing. But Powell and other Fed committee members are waiting to see whether Trump's tariffs lift inflation, which higher interest rates could help blunt. The Fed chair pushed back against criticism during a June congressional hearing that the renovation was lavish by saying some features were removed due to cost, leading the White House to speculate as to whether Powell deceived lawmakers or made changes to the renovation plans without getting additional approvals. At that hearing, Sen. Tim Scott, R-S.C., also cited 'white marble' as an example of extravagance. James Blair, a White House deputy chief of staff who was recently added to the planning commission, said Wednesday that he would send a letter to the Fed requesting any revisions to the project. His goal is to see whether Powell was accurate in his congressional testimony. 'He's either telling the truth or he isn't,' Blair told The Associated Press. 'If he's telling the truth, he can prove it by just submitting all the plans and revisions.' Trump said Wednesday that he's 'highly unlikely' to try to fire Powell unless there was what he deemed as 'fraud.' 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Stroik 'does not think the proposed additions defer to the historic buildings as great marble edifices on an important street,' the minutes added. Stroik's amendment was voted down, but the commission didn't fully endorse the Fed's plans. The architects presented new plans in May 2020, though those didn't appear to satisfy Trump's appointees. Some commissioners 'continued to object to the addition as a glass box that is reminiscent of a commercial office building, glowing at night, that would present an unacceptable contrast to the solid masonry architecture of the historic building in its monumental context,' the commission wrote in a May 2020 letter to a Fed official. By July 2020, however, the Fed's architects came back with a new proposal, which included 'panels of white Georgia marble' which would be used for the 'base, cornice, and other details, consistent with the historic building,' the commission's minutes said. Neoclassical vs. modern designs Stroik, now a professor of architecture at the University of Notre Dame, said in an interview that 'stone buildings don't necessarily have to cost a fortune.' But he acknowledged that the commission had not discussed expenses, which has not been part of its mission. 'If they wanted to play the cost game, you do a marble facade and you do the glass facade and you compare the cost,' Stroik said. 'And you know, they never did that.' Krieger, the former commission member, noted that the body's discussions became much more contentious after the Trump administration removed several members and replaced them with Stroik and James McCrery, a professor at Catholic University, whom he said often echoed the sentiments in a then- draft executive order from Trump that extolled classical architecture. Monday Mornings The latest local business news and a lookahead to the coming week. 'At the time, it was a fierce battle over how literal to the original design should the renovations be,' Krieger said. 'Normally, that attitude does add costs to the construction project.' McCrery declined to comment. Trump issued the executive order in December 2020, which criticized modernist architecture and expressed a preference for 'beautiful' classical buildings with more traditional designs. Biden revoked the order, and Trump reissued it the first day of his second term. The commission did not fully approve the Fed's project until September 2021, after McCrery and another Trump appointee, Justin Shubow, had been removed by then President Joe Biden. __ Associated Press writer Seung Min Kim contributed to this report.
Toronto Star
a day ago
- Toronto Star
German leader Merz says his government has a ‘stable foundation' despite a dispute
BERLIN (AP) — German Chancellor Friedrich Merz said Friday that his coalition has a 'stable foundation' and has achieved a lot in its first 10 weeks, but acknowledged that 'occasional setbacks' are a risk in government as his administration struggles with its first major dispute. Merz took office on May 6, leading a coalition of his conservative Union bloc with the center-left Social Democrats that has a relatively thin parliamentary majority. He vowed to strengthen Europe's biggest economy after years of stagnation, enable Germany to build Europe's strongest conventional army and keep the U.S. on board with aid to Ukraine.
