The dollar index (DXY00) Thursday fell by -0.71%.  The dollar tumbled to a 3-1/4 year low Thursday as comments from President Trump sparked trade uncertainty and weighed on the dollar. Late Wednesday, Mr. Trump said he intends to send letters to dozens of US trading partners in the next one to two weeks setting unilateral tariffs, ahead of the July 9 deadline that came with his 90-day pause.  Losses in the dollar accelerated on Thursday following the weaker-than-expected US jobless claims and PPI reports, which bolstered expectations for Fed rate cuts later this year. 

US weekly initial unemployment claims were unchanged at an 8-month high of 248,000, showing a weaker labor market than expectations of a decline to 242,000.  Weekly continuing claims rose +54,000 to a 3-1/2 year high of 1.956 million, showing a weaker labor market than expectations of 1.910 million.

The US May final-demand PPI report moved up to +2.6% y/y from +2.5% y/y in April, right on expectations. The May PPI ex-food and energy report eased to +3.0% y/y from +3.2% y/y in April, better than expectations of +3.1% y/y.

The markets are discounting the chances at 3% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) Thursday rose by +0.78% and posted a 3-1/2 year high. The euro rallied on Thursday as trade uncertainty and weak US economic reports hammered the dollar.  Also, hawkish ECB comments on Thursday boosted the euro after ECB Executive Board member Schnabel said the ECB's interest rate cutting campaign may soon be over, and ECB Governing Council member Simkus said he favors a pause in interest rate moves by the ECB.

ECB Executive Board member Schnabel said the ECB's interest rate-cutting campaign may soon be over, with inflation and the economy both on track. 

ECB Governing Council member Simkus said he favors a pause in interest rate moves by the ECB due to "very big uncertainty" over US tariff policy. 

Swaps are discounting the chances at 13% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

USD/JPY (^USDJPY) Thursday fell by -0.71%.  The yen climbed to a 1-week high against the dollar on Thursday on an increase in safe-haven demand after tariff threats from President Trump sparked trade uncertainty and weighed on the dollar.  The yen added to its gains Thursday after weaker-than-expected reports on US jobless claims and PPI knocked T-note yields lower.

Japan's Q2 BSI large manufacturing business conditions weakened to -4.8 q/q from -2.4 in Q1.

August gold (GCQ25) Thursday closed up +58.70 (+1.76%), and July silver (SIN25) closed up +0.034 (+0.09%).  Precious metals on Thursday settled higher, with gold up sharply.  Thursday's plunge in the dollar index to a 3-1/4 year low propelled metals prices higher.  Also, tariff threats from President Trump have boosted trade uncertainty and fueled demand for precious metals as a safe haven.  In addition, Thursday's US economic reports were weaker than expected and were dovish for Fed policy, a bullish factor for precious metals. Finally, escalating tensions in the Middle East are boosting safe-haven demand for precious metals after US authorities ordered some staff to depart the US embassy in Baghdad after Iran threatened to strike US bases in the region if attacked.

Silver gave up most of its gains Thursday due to concerns about industrial metal demand.  Thursday's UK manufacturing production and industrial production reports for May were weaker than expected, a negative factor for industrial metals demand.  Also, President Trump's latest tariff threats may curb economic activity and demand for industrial metals.

UK Apr manufacturing production fell -0.9% m/m, weaker than expectations of -0.7% m/m.  Also, Apr industrial production fell -06% m/m, weaker than expectations of -0.5% m/m.