The U.S. dollar index (DXY) fell 0.10% amid a recovery in the Japanese yen, which rose from a 39-year low after Japan’s June exports increased by 19.3% year-over-year. The U.S. is currently engaged in an 11-day campaign of attacks on Iran, impacting global oil supply while President Trump stated there’s no interest in peace talks with Iran until they are ready for serious negotiations.
In the foreign exchange market, the euro increased by 0.14% as higher European government bond yields supported the currency. The swaps market is pricing in a 29% chance of a 25 basis points rate hike at the upcoming Federal Open Market Committee meeting on July 28-29. Additionally, U.S. crude oil prices surged by over 3%, reaching a six-week high, influencing inflation expectations and potential Federal Reserve monetary policy tightening.
Gold and silver prices rose to two-week highs today, driven by a weaker dollar and increased safe-haven demand due to escalating tensions between the U.S. and Iran. However, concerns over rising bond yields and a potential tightening of monetary policy by central banks pose bearish pressure on precious metals. The People’s Bank of China reported an increase in gold reserves by 480,000 ounces, marking the 20th consecutive month of growth.
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