The dollar index (DXY00) fell by 0.47% on Tuesday, reaching a 1.5-week low, primarily driven by lower T-note yields and a surprise decline in the US July Richmond Fed manufacturing index, which dropped by 12 points to -20, the lowest level in 11 months. The market was under pressure due to concerns over Federal Reserve Chair Powell’s job security amidst political pressures.
In other currency movements, the EUR/USD rose by 0.47%, influenced by dollar weakness and expectations of unchanged interest rates from the ECB at its upcoming meeting, despite weak loan demand reported in the ECB’s quarterly Bank Lending Survey. The USD/JPY also declined by 0.58%, with the Japanese yen reaching a one-week high.
Precious metals saw gains, with August gold rising by $37.30 (+1.09%) to a five-week high, supported by the dollar’s decline and lower bond yields. In contrast, silver prices had mixed results due to the weakening of industrial metals demand following the disappointing Richmond Fed survey results.