The dollar index (DXY00) Friday fell by -0.29%.  The dollar gave up an early advance Friday and turned lower after the University of Michigan March US consumer sentiment index was revised downward to a 2-1/3 year low.  Also, Friday's US economic news showed that Feb personal spending rose less than expected, a negative factor for the dollar. 

In addition, Thursday evening's comments from Richmond Fed President Barkin weighed on the dollar when he said rapid changes to US trade policy have created "a sense of instability" in the business community, and the associated decline in sentiment could "quiet demand."  The dollar maintained its losses Friday on comments from San Francisco Fed President Daly, who said the Fed could take its time to assess the impact of tariffs on the economy, and she still sees two 25 bp interest rate cuts this year by the Fed as a "reasonable" projection.

The dollar Friday initially moved higher as trade tensions are weighing on stocks and boosting liquidity demand for the dollar.  Also, hawkish comments Thursday evening from Boston Fed President Collins boosted the dollar when said that it looks "inevitable" that tariffs will boost inflation.  In addition, the University of Michigan's March US inflation expectations indicator was revised higher, a hawkish factor for Fed policy. 

US Feb personal spending rose +0.4% m/m, weaker than expectations of +0.5% m/m.  Feb personal income rose +0.8% m/m, stronger than expectations of +0.4% m/m and the largest increase in 13 months.

The US Feb core PCE price index rose +0.4% m/m and +2.8% y/y, stronger than expectations of +0.3% m/m and +2.7% y/y.

The University of Michigan March Mar US consumer sentiment index was revised downward by -0.9 to a 2-1/3 year low of 57.0, weaker than expectations of no change at 57.9.

The University of Michigan March US 1-year inflation expectations indicator was revised upward to a 2-1/3 year high of +5.0%, higher than expectations of +4.9%.  Also, the March 5-10 year inflation expectations indicator was revised upward to a 32-year high of +4.1% y/y, stronger than expectations of +3.9%.

The markets are discounting the chances at 21% for a -25 bp rate cut after the May 6-7 FOMC meeting.

EUR/USD (^EURUSD) Friday rose by +0.23%.  The euro recovered from early losses Friday and moved higher after the dollar retreated, which sparked short covering in the euro.  The euro also garnered support after the ECB's Feb 1-year inflation expectations rose more than expected, a hawkish factor for ECB policy. In addition, the euro rose after Bloomberg reported the European Union (EU) said it is identifying concessions it's willing to make to the US to secure partial removal of the tariffs that have already started and the ones that are set to increase after April 2.

The euro initially moved lower Friday after the Eurozone March economic confidence index unexpectedly declined, and the German labor market weakened after the German Mar unemployment rate unexpectedly rose to a 4-1/2 year high.  In addition, lower German bund yields have weakened the euro's interest rate differentials after the 10-year German bund yield fell to a 3-week low today of 2.707%.

The Eurozone Mar economic confidence index unexpectedly fell -1.1 to 95.2, weaker than expectations of an increase to 96.7.

The ECB's Feb 1-year inflation expectations indicator was unchanged from Jan at 2.6%, stronger than expectations of 2.5%.

German Mar unemployment rose by +26,000, showing a weaker labor market than expectations of +10,000. The Mar unemployment rate unexpectedly rose +0.1 to a 4-1/2 year high of 6.3%, showing a weaker labor market than expectations of no change at 6.2%.

Swaps are discounting the chances at 85% for a -25 bp rate cut by the ECB at the April 17 policy meeting.

USD/JPY (^USDJPY) Friday fell by -0.75%.  The yen on Friday recovered from a 3-1/2 week low against the dollar and rallied on signs of faster inflation after the Japan Mar Tokyo CPI rose more than expected, which was hawkish for BOJ policy.  Also, Friday's fall in the Nikkei Stock Index to a 2-week low boosted safe-haven demand for the yen.  Gains in the yen accelerated Friday when T-note yields slumped after the University of Michigan March US consumer sentiment index fell to a 2-1/3 year low.

Japan Mar Tokyo CPI rose +2.9% y/y, stronger than expectations of +2.7% y/y.  Also, Mar Tokyo CPI ex-fresh food and energy rose +2.2% y/y, stronger than expectations +1.9% y/y, and the largest increase in a year.

April gold (GCJ25) Friday closed up +25.50 (+0.83%), and May silver (SIK25) closed down -0.269 (-0.77%).  Precious metals on Friday settled mixed, with April gold posting a record nearest-futures high of $3,094.90 an ounce.  Silver retreated from a 13-year nearest-futures high and closed moderately lower.  Trade war concerns continue to fuel safe-haven demand for precious metals after President Trump announced a 25% tariff on US auto imports late Wednesday. Also, lower global bond yields on Friday are supportive of precious metals.  In addition, geopolitical risks in the Middle East are 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.  Silver also has support on concern about retaliatory tariffs on silver exports from Canada and Mexico, where the US gets 70% of its silver. 

Friday's US economic news showed that the Feb core PCE price index rose more than expected, and the University of Michigan US Mar inflation expectations indicator was revised higher, hawkish factors for Fed policy and bearish for precious metals.  Also, hawkish comments from Boston Fed President Collins were negative for precious metals when she said that it looks "inevitable" that tariffs will boost inflation, at least in the near term. Silver is also under pressure as Wednesday's action by President Trump to impose 25% tariffs on US auto imports threatens to spark a trade war that could derail global economic growth and industrial metals demand.