The dollar index (DXY00) Friday rose by +0.06%.  The dollar on Friday posted modest gains, supported by stronger-than-expected US economic news.  Also, Friday's stock weakness boosted some liquidity demand for the dollar.  In addition, hawkish comments from Dallas Fed President Logan were supportive of the dollar when she said it may be "quite some time" before the Fed adjusts interest rates.

Gains in the dollar were muted Friday by US-China trade tensions after US Treasury Secretary Bessent said that trade talks with China were "a bit stalled," and President Trump accused China of violating its tariff agreement with the US.  Also, Friday's Fed-friendly US core PCE price index, the Fed's preferred inflation gauge, was dovish for Fed policy and negative for the dollar. 

US Apr personal spending rose +0.2% m/m, right on expectations.  Apr personal income rose +0.8% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 15 months. 

The US Apr core PCE price index, the Fed's preferred inflation gauge, rose +0.1% m/m and +2.5% y/y, right on expectations.  The +2.5% y/y gain was the smallest in more than 4 years.

The US May Chicago PMI unexpectedly fell -4.1 to 40.5, weaker than expectations of an increase to 45.0.

The University of Michigan May US consumer sentiment index was revised upward by +1.4 to 52.2, stronger than expectations of 51.5.

The University of Michigan US May 1-year inflation expectations indicator was revised lower to +6.6% from the previously reported +7.3%, weaker than expectations of +7.1%.  Also, the May 5-10 year inflation expectations indicator was revised lower to +4.2%, weaker than expectations of no change at +4.6%.

Late Thursday, Dallas Fed President Logan said it may be "quite some time" before Fed officials know how the economy will respond to tariffs and other policy changes and the Fed adjusts interest rates.

The markets are discounting the chances at 5% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) Friday fell by -0.09%.  Friday's stronger dollar weighed on the euro.  Also, Friday's Eurozone economic news undercut the euro after the Eurozone Apr M3 money supply rose more than expected, and German Apr retail sales unexpectedly posted their largest decline in 1-1/2 years.  Losses in the euro were contained after German May CPI rose more than expected, a hawkish factor for ECB policy. 

Eurozone Apr M3 money supply rose +3.9% y/y, stronger than expectations of +3.7% y/y.

German Apr retail sales unexpectedly fell -1.1% m/m, weaker than expectations of a +0.2% m/m increase and the biggest decline in more than 1-1/2 years.

German May CPI (EU harmonized) rose +0.2% n/n and +2.1% y/y, stronger than expectations of +0.1% m/m and +2.0% y/y.

Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) Friday fell by -0.21%.  The yen on Friday rose against the dollar as the escalation of US-China trade tensions boosted safe-haven demand for the yen after President Trump accused China of violating its tariff agreement with the US.  Also, Friday's Japanese economic news was supportive of the yen after the industrial production and Tokyo CPI (ex-fresh food and energy) reports were stronger than expected, hawkish factors for BOJ policy.  In addition, higher Japanese government bond yields on Friday are positive for the yen after the BOJ said it plans to buy government bonds in June at the same pace as it did in May. 

Japan's Apr industrial production fell -0.9% m/m, a smaller decline than expectations of -1.4% m/m.

The Japan May Tokyo CPI rose +3.4% y/y, unchanged from Apr and right on expectations.  May Tokyo CPI ex-fresh food and energy rose +3.3% y/y, stronger than expectations of +3.2% y/y and the largest increase in 16 months.

June gold (GCM25) Friday closed down -28.20 (-0.85%), and July silver (SIN25) closed down -0.394 (-1.18%).  Precious metals Friday retreated due to the strength of the dollar.  Also, hawkish comments from Dallas Fed President Logan weighed on precious metals when she said it may be "quite some time" before the Fed adjusts interest rates.  In addition, Friday's stronger-than-expected US personal income and consumer sentiment reports were stronger than expected and were hawkish for Fed policy and bearish for precious metals.  Silver prices were undercut on concern the escalation of US-China trade tensions will lead to diminished economic activity that curbs demand for industrial metals.

Losses in precious metals were limited Friday as the escalation of US-China trade tensions boosted safe-haven demand for precious metals after President Trump accused China of violating their tariff agreement negotiated earlier this month.  Also, Friday's decline in the US Apr core PCE price index, the Fed's preferred inflation gauge, to the lowest level in more than 4 years was dovish for Fed policy and positive for precious metals.  In addition, precious metals prices have continued safe-haven support from uncertainty about global trade relations and geopolitical tensions in Ukraine and the Middle East.