The dollar index (DXY00) today is up by +0.15%.  The dollar is climbing today on increased safe-haven demand after the US-Iran peace talks broke down over the weekend, threatening to escalate hostilities in the Middle East.  The dollar fell back from its best level today after US Mar existing home sales fell more than expected to a 9-month low.

President Trump ordered a blockade of the Strait of Hormuz following the deadlocked peace talks over the weekend between the US and Iran.  President Trump said the US will begin a full naval blockade of the Strait of Hormuz today and threatened to retaliate in the event of Iranian resistance. Iran said it would target all ports in and close to the Persian Gulf if its own shipping hubs are threatened. 

US Mar existing home sales fell -3.6% m/m to a 9-month low of 3.98 million, weaker than expectations of 4.05 million.

Swaps markets are discounting the odds at 2% for a +25 bp rate hike at the April 28-29 FOMC meeting.

The dollar continues to be undercut by a poor outlook for interest rate differentials, with the FOMC expected to cut interest rates by at least -25 bp in 2026, while the BOJ and ECB are expected to raise rates by at least +25 bp in 2026. 

EUR/USD (^EURUSD) today is down by -0.25%.  The dollar's strength today is weighing on the euro. Also, today's +4% jump in crude oil prices is negative for the Eurozone economy and the euro, as Europe imports most of its energy.

Swaps are discounting a 41% chance of a +25 bp rate hike by the ECB at the April 30 policy meeting.

USD/JPY (^USDJPY) today is up by +0.30%.  The yen is falling today after comments from BOJ Governor Ueda reduced the chances of a BOJ interest rate increase later this month to 34% from 55% on Friday when he signaled a more cautious stance on monetary policy due to the impact of the US-Iran war.  Also, today's +4% jump in crude oil prices is negative for the Japanese economy and the yen, as Japan imports more than 90% of its energy needs. In addition, higher T-note yields today are bearish for the yen.

BOJ Governor Kazuo Ueda said, "Looking ahead, developments in the Middle East remain uncertain, and we will closely monitor them and their potential impact on economic activity, prices, and financial conditions."

The markets are discounting a +34% chance of a 25 bp BOJ rate hike at the next meeting on April 28.

June COMEX gold (GCM26) today is down -36.60 (-0.76%), and May COMEX silver (SIK26) is down -2.1350 (-2.79%).

Gold and silver prices are moving lower today, with gold sliding to a 1-week low.  Today's stronger dollar and higher global bond yields are bearish for precious metals prices.  Also, today's +4% rally in crude oil prices may boost inflation and prompt the world's central banks to pursue tighter monetary policies, a bearish factor for precious metals.  Silver prices also came under pressure today after US Mar existing home sales fell more than expected to a 9-month low, a negative factor for industrial metals demand.

Losses in precious metals were limited today amid concerns about the escalation of the US-Iran war after President Trump ordered the US Navy to begin a full naval blockade of the Strait of Hormuz.  Also, uncertainty over US tariffs, US political turmoil, large US deficits, and government policy uncertainty are boosting demand for precious metals as a store of value.

Recent fund liquidation of precious metals is bearish for prices, as long holdings in gold ETFs fell to a 4-month low on March 31 after climbing to a 3.5-year high on February 27.  Also, long holdings in silver ETFs fell to a 7-month low on March 27 after rising to a 3.5-year high on December 23.

Strong central bank demand for gold is supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +160,000 ounces to 74.38 million troy ounces in March, the seventeenth consecutive month the PBOC has boosted its gold reserves.