The dollar index (DXY00) Wednesday rose by +0.38%.  The dollar on Wednesday added to Tuesday's gains on positive carryover from President Trump's action over the past weekend to extend the deadline for a 50% tariff on US importers of EU goods by about 5 weeks to July 9 from June 1.  

The dollar also had support Wednesday from higher T-note yields.  Gains in the dollar accelerated Wednesday afternoon when the minutes of the May 6-7 FOMC meeting showed policymakers supported keeping interest rates on hold.

The US May Richmond Fed manufacturing survey rose by +4 to -9, right on expectations.

The minutes of the May 6-7 FOMC meeting signaled policymakers were satisfied to keep interest rates on hold.  The minutes stated, "Participants agreed that with economic growth and the labor market still solid and current monetary policy moderately restrictive, the committee was well positioned to wait for more clarity on the outlooks for inflation and economic activity."

The markets are discounting the chances at 2% for a -25 bp rate cut after the June 17-18 FOMC meeting.

EUR/USD (^EURUSD) Wednesday fell by -0.31%.  Wednesday's dollar strength undercut the euro.  Also, weaker-than-expected economic news weighed on the euro after German May unemployment rose more than expected and after German Apr import prices fell more than expected, dovish factors for ECB policy.  Losses in the euro were limited Wednesday after the ECB's Apr 1-year CPI expectations indicator was the highest in 14 months, a hawkish factor for ECB policy.

The ECB Apr 1-year CPI expectations indicator of +3.1% y/y was stronger than expectations of +2.8% y/y and the highest in 14 months.  The ECB Apr 3-year CPI expectations indicator was unchanged from March at +2.5% y/y, right on expectations.

German May unemployment rose by +34,000, higher than expectations of +12,000 and the largest increase in 2-3/4 years.  The May unemployment rate was unchanged at 6.3%, right on expectations.

The German Apr import price index fell -1.7% m/m, a bigger decline than expectations of -1.4% m/m and the largest drop in more than two years.

Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

USD/JPY (^USDJPY) Wednesday rose by +0.37%.  The yen on Wednesday added to Tuesday's sharp losses and fell to a 1-week low against the dollar on negative carryover from Tuesday when Bloomberg News reported that Japan's finance ministry sent a questionnaire to market participants regarding appropriate issuance amounts for government bonds, a sign the finance ministry may seek to reduce debt issuance.  Also, higher T-note yields on Wednesday weighed on the yen.

June gold (GCM25) Wednesday closed down -5.50 (-0.17%), and July silver (SIN25) closed down -0.151 (-0.45%).  Precious metals on Wednesday posted modest losses.  Bearish factors for precious metals include Wednesday's stronger dollar and higher global bond yields.  The minutes of the May 6-7 FOMC meeting were slightly hawkish and were bearish for precious metals as policymakers signaled their support to keep interest rates on hold. Silver prices were also under pressure because of the concern that an escalation of the global trade war would dampen economic activity and demand for industrial metals.

Losses in precious metals on Wednesday were limited.  Demand for gold as an inflation hedge rose Wednesday after the ECB's Apr 1-year CPI expectations indicator of +3.1% y/y was stronger than expectations of +2.8% y/y and the highest in 14 months.  Precious metals prices also have continued safe-haven support from uncertainty about global trade relations and geopolitical tensions in Ukraine and the Middle East.