The dollar index (DXY) increased by 0.37%, supported by strong U.S. interest rate differentials and a 5 basis point rise in the 10-year T-note yield, reaching a 1.5-year high. This follows a surge in oil prices exceeding 5% and a report indicating stronger-than-expected U.S. unemployment claims. Safe-haven demand for the dollar has also been driven by a missile and drone attack on two Saudi Arabian oil tankers by the Iran-backed Houthis, which threatens oil shipments in the Red Sea.
In the forex market, EUR/USD fell 0.39% due to dollar strength, while the euro gained some support from a new 15-year high in the 10-year German bund yield. The European Central Bank (ECB) maintained its key deposit rate at 2.25% but indicated a 93% likelihood of a 25 basis point rate hike at its next meeting on September 10. Meanwhile, USD/JPY rose 0.47%, with the yen dropping to a 39-year low against the dollar, raising intervention risks.
In commodities, gold and silver prices dropped sharply due to the stronger dollar and rising bond yields, with August COMEX gold declining by 2.24% and September COMEX silver down by 3.46%. Fund liquidations contributed to the downturn, with gold and silver ETF holdings hitting 9.75-month and 1-year lows, respectively. Nonetheless, sustained demand from central banks, particularly China’s PBOC, which increased its gold reserves by 480,000 ounces to 75.44 million troy ounces, provides some underlying support for gold prices.
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