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The dollar index (DXY00) increased by 0.25% on Monday, boosted by the November Empire manufacturing general business conditions index rising to a one-year high of 18.7, surpassing expectations of 5.8. The likelihood of a Federal Reserve rate cut at the upcoming FOMC meeting on December 9-10 has decreased from 70% to 41% following supportive comments from multiple Fed presidents.
Japan’s Q3 GDP fell 1.8%, better than the anticipated decline of 2.4%, while the 10-year JGB bond yield rose to a 17-year high of 1.74%. The markets currently project a 30% chance of a Bank of Japan rate hike in their December 19 meeting. Meanwhile, the European Commission upgraded its 2025 Eurozone GDP forecast from 0.9% to 1.3%, with the inflation forecast remaining at 2.1%.
Precious metals faced pressure, with December COMEX gold falling 0.48% to close down $19.70 due to a stronger dollar and decreasing expectations for a Fed rate cut. Central bank demand for gold remained strong, with China’s PBOC reserves rising to 74.09 million troy ounces in October, marking the twelfth consecutive month of increases.
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