The U.S. dollar index (DXY) fell by 0.20% from a new 1.5-month high as WTI crude oil prices dropped over 2%, easing inflation expectations and supporting stock rallies that reduced the need for dollar liquidity. Despite this decline, U.S. weekly jobless claims unexpectedly fell by 10,000 to 196,000, indicating a stronger labor market than the anticipated increase to 207,000. The Federal Reserve raised interest rates by 25 basis points on September 20, with a 51% chance of another hike at the next meeting on October 27-28.
In housing data, August housing starts dropped 2.6% month-over-month to 1.275 million, below forecasts of 1.320 million, while building permits fell by 2.7% to 1.394 million, also weaker than expected. Conversely, August pending home sales rose 0.3%, defying expectations of a decline. The Philadelphia Fed’s business outlook survey fell sharply by 9.6 to 37.8, exceeding forecasts of 32.1.
In the foreign exchange market, the euro recovered, rising by 0.25% against the dollar, supported by the weaker dollar and falling crude prices. The Japanese yen also strengthened by 0.35%, buoyed by similar economic factors and expectations of a Bank of Japan interest rate hike on September 22. Precious metals saw gains as December COMEX gold rose by 0.46% and silver by 2.39%, aided by the weaker dollar and falling bond yields.
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