The dollar index (DXY00) is up +0.17% on support from today's +4.7 bp rise in the 10-year T-note yield, which supported the dollar's interest rate differentials.  Also, today's +4% rally in WTI crude oil prices is hawkish for Fed policy and supportive of the dollar. 

Today's US CPI report was in line with market expectations and roughly neutral for the dollar.  The Feb CPI rose +0.3% m/m and +2.4% y/y, while the Feb core CPI rose +0.2% m/m and +2.5% y/y.  Today's headline CPI report of +2.4% y/y was just 0.1 point above the 5-year low posted in April 2025, while today's core CPI of +2.5% y/y matched the 5-year low posted in the two previous months.  Even though the CPI figures are at or near 5-year lows, they are still above the Fed's target of +2%.  Moreover, inflation pressures will worsen in the coming months due to the recent spike in oil and fuel prices caused by the war in Iran.

WTI oil prices are up about +4% today as the oil market volatility continues.  WTI oil prices spiked up to a 3.75-year high of $119.48 on Monday after Israel bombed 30 fuel depots in Iran, but have since fallen back to the $86 per barrel area after President Trump claimed the Iran war would be over "very soon." In addition, the IEA today proposed a huge 400 million-barrel release by the G-7 nations, much larger than the 182 million-barrel release in 2022 following Russia's invasion of Ukraine.  An oil release could be approved by G-7 leaders later today during a remote meeting.  The release is designed to replace the oil lost due to the Strait of Hormuz shutdown and the subsequent production cuts by Persian Gulf oil producers, although it will take some time for the oil stockpiles to reach the market.

Swaps markets are discounting the odds at 4% for a -25 bp rate cut at the next FOMC policy meeting on March 17-18.

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) is down -0.19% on dollar strength.  Also, the euro is being undercut by today's rally in WTI crude oil, which is negative for the Eurozone economy.

Swaps are discounting a 3% chance of a +25 bp rate hike by the ECB at its next policy meeting on March 19.

USD/JPY (^USDJPY) is up +0.38% on dollar strength.  The yen also faces downward pressure from today's higher oil prices, which are negative for Japan's economy since Japan is heavily dependent on imported energy.

The markets are discounting a +5% chance of a BOJ rate hike at the next meeting on March 19.

April COMEX gold (GCJ26) is down -45.6 (-0.87%), and May COMEX silver (SIK26) is down -3.837 (-4.28%).  closed up +5.069 (+6.00%).

Precious metals prices today are trading lower, falling back after Tuesday's sharp rallies of +2.71% in gold and +6.00% in silver.  Precious metals prices today are being undercut by a rise in US T-note yields and the mildly higher dollar.

However, precious metals have underlying support from safe-haven demand as the war in Iran drags on, with three vessels hit by missiles today in the Strait of Hormuz and the Persian Gulf, and with new volleys of missiles hitting Israel.

Today's US CPI report was in line with market expectations and was considered old news in any case. 

Strong central bank demand for gold is also supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +40,000 ounces to 74.19 million troy ounces in January, the fifteenth consecutive month the PBOC has boosted its gold reserves. 

Fund demand for precious metals remains strong, with long holdings in gold ETFs climbing to a 3.5-year high on February 27.  Also, long holdings in silver ETFs rose to a 3.5-year high on December 23, though liquidation has since knocked them down to a 3.5-month low on February 23.