The dollar index rose 0.47% today, supported by a 3.6 bp increase in the 10-year T-note and 30-year T-bond yield rising above 5%. The US CPI report showed a 0.2% m/m increase in core CPI, slightly below expectations, but year-over-year figures rose from May. Fed easing expectations remained unchanged.

In June, US CPI rose 0.3% m/m and core CPI rose 0.2% m/m, with year-over-year figures slightly higher than expectations. Market expectations for Fed easing were not improved by the CPI report, with futures pricing in a 25 bp rate cut at 3% for the July FOMC meeting.

Treasury Secretary Mnuchin reported positive progress in US-China trade talks, reducing safe-haven demand for the dollar. He confirmed a license for Nvidia’s sale of H20 GPU chips to Chinese firms and expressed hope for a meeting with Chinese Vice Premier. EUR/USD fell 0.36% on dollar strength and declining bund yields.

The euro received support from the German ZEW expectations index rising above expectations and Eurozone industrial production exceeding market forecasts. Swaps are pricing in a 2% chance of a 25 bp rate cut by the ECB at the July policy meeting. USD/JPY increased by 0.76% due to dollar strength and concerns over Japan’s upcoming election.

Gold and silver prices fell today due to a 0.47% rise in the dollar index and a 3.6 bp increase in the 10-year T-note yield. Silver saw long liquidation after falling from a contract high. Precious metals also declined on positive trade news regarding US-China negotiations.

Read more at Yahoo Finance: Dollar Rallies on Higher T-note Yields