The U.S. dollar index (DXY) surged to a 13-month high on Thursday, increasing by 0.80%, largely due to the Federal Reserve’s projection of higher interest rates later this year. Concurrently, weekly initial unemployment claims decreased by 4,000 to 226,000, closely aligning with expectations of 225,000. The Philadelphia Fed business outlook survey for June improved significantly, rising by 10.7 to a total of 10.3, surpassing the anticipated value of 10.0.
In the foreign exchange market, the euro fell to a 2.5-month low against the dollar, closing down 0.40%. Market speculation indicates a 17% probability of a 25 basis point rate hike by the European Central Bank at its next meeting on July 23. The Japanese yen hit a 23-month low against the dollar, as USD/JPY rose by 0.67%, influenced by the Fed’s hawkish stance and a rally in Japanese stocks.
In commodities, August COMEX gold dropped by $135.50 (3.09%) and July COMEX silver fell by $4.448 (6.29%), driven down by the dollar’s strength and reduced safe-haven demand amid equity market gains. Notably, gold holdings in China’s PBOC reserves increased by 320,000 ounces in May, marking the largest monthly rise in 17 months.
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