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The dollar index (DXY) fell by 0.58% on Friday, pressured by retreating T-note yields and dovish comments from Federal Reserve officials, increasing expectations for a rate cut at the upcoming FOMC meeting on October 28-29, with a 97% chance priced in for a 25 basis point reduction. Additionally, the ongoing U.S. government shutdown, now into its second week, heightens concerns for economic growth, negatively impacting the dollar.
On the global front, the University of Michigan’s October consumer sentiment index fell to a five-month low of 55.0, while one-year inflation expectations dropped to 4.6%. In Japan, producer prices rose by 0.3% month-on-month and 2.7% year-on-year, surpassing expectations, amid concerns following a coalition collapse that could complicate budget approvals. USD/JPY dropped 0.88% as a result.
Precious metals saw gains, with December gold rising by $27.80 (+0.70%) and December silver up by $0.09 (+0.19%) on Friday, driven by dollar weakness and safe-haven demand due to escalating U.S.-China trade tensions and political turmoil in Japan.
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