The dollar index (DXY00) today is up +0.31%, rebounding higher from Thursday's 3-1/4 year low.  The dollar today rallied on Israel's overnight attack on Iran, which sparked some safe-haven demand for the dollar.  The dollar also moved higher as the 10-year T-note yield rose due to the inflation implications of today's +7% rally in oil prices. 

The dollar is also seeing support from today's stronger-than-expected US consumer sentiment report.  The preliminary June University of Michigan US consumer sentiment index rose +8.3 points to 60.5, stronger than expectations for a rise to 53.6.  In another favorable development, 1-year inflation expectations fell to +5.1% from +6.6% in May, which was a larger decline than expectations of a decline to +6.4%.  The 5-10 year inflation expectations indicator fell slightly to +4.1% from +4.2% in May, in line with market expectations.

Despite today's rebound, the dollar remains generally weak and is only modestly above Thursday's 3-1/4 year low.  The dollar has suffered in the past several months due to expectations for weaker US economic growth and reduced foreign investment in the US caused by President Trump's tariffs. 

Mr. Trump said late Wednesday that 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.

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

EUR/USD (^EURUSD) today is down -0.42%, falling back from Thursday's 3-1/2 year high.  The euro is trading lower on dollar strength and today's weaker-than-expected EU trade and industrial production reports.

The EU's April trade surplus of 14.0 billion euros was smaller than expectations of 18.3 billion euros and was down from March's revised 28.8-billion-euro surplus.

The April EU industrial production report of -2.4% m/m and +0.8% y/y was weaker than expectations of -1.7% m/m and +1.2% y/y.

The final-May German EU-harmonized CPI was left unrevised at +0.2% m/m and +2.1% y/y, in line with market expectations.

The euro has carry-over support from hawkish comments from ECB officials on Thursday.  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) is up +0.45% on dollar strength.  The yen was also undercut by today's downward revision in Japan's industrial production report. 

Japan's final-April industrial production was revised lower to -1.1% from -0.9% m/m, and to +0.5% from +0.7% y/y.

August gold (GCQ25) is up +46.1 (+1.35%), and July silver (SIN25) is down -0.130 (-0.36%).  Gold is trading higher on safe-haven demand after last night's Israeli military attack on Iran.  Gold also has underlying support from tariff uncertainty, after President Trump indicated on Wednesday that he is moving ahead with his reciprocal tariffs. 

Today's rally in the dollar is undercutting gold prices.  Meanwhile, silver is being undercut by concern that the upward spike in oil prices from Israel's attack on Iran will undercut global economic growth and industrial metals demand.