The dollar index (DXY00) increased by 0.29% on Wednesday, recovering from a nearly four-year low as U.S. Treasury Secretary Bessent affirmed that the U.S. would not intervene in the currency market to bolster the yen. The Federal Open Market Committee (FOMC) voted 10-2 to maintain the federal funds target range at 3.50%-3.75%, noting solid economic expansion and elevated inflation levels. The market anticipates a 14% chance of a 25 basis point rate cut in the next policy meeting scheduled for March 17-18.
The yen had surged to a 2.75-month high but weakened after statements from U.S. officials indicated no planned forex intervention to aid the currency. Meanwhile, the threat of a partial U.S. government shutdown looms as Senate Democrats oppose a funding deal linked to recent immigration enforcement controversies.
Precious metals saw a significant boost, with February COMEX gold reaching a record high of $5,323.40 per ounce, driven by political instability and growing demand for safe-haven assets. Central bank purchases continued to rise, with China’s gold reserves increasing by 30,000 ounces to 74.15 million troy ounces in December.
