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The dollar index (DXY) fell by 0.25% today as the market reacted to dovish remarks from Fed Governor Christopher Waller, who indicated openness to quarter-point interest rate cuts in upcoming meetings. The dollar’s decline was exacerbated by the University of Michigan’s October consumer sentiment index, which dropped to 55.0, marking a five-month low, below expectations of 54.0. Additionally, the U.S. government shutdown entered its second week, heightening concerns about economic impacts that could further weaken the dollar.
In Japan, the yen rebounded from a 7.75-month low following a stronger-than-expected increase in producer prices, which rose by 0.3% month-over-month and 2.7% year-over-year. This recovery was supported by comments from Finance Minister Kato regarding potential intervention in the currency market. Meanwhile, the yen has faced pressures due to political instability linked to the collapse of Japan’s governing coalition, which could hinder legislative progress.
Precious metals are experiencing gains today, with December gold rising by $21.30 (+0.54%) and silver up by $1.058 (+2.24%), driven by the weak dollar and lower global bond yields. Safe-haven demand has increased amid political turmoil in both Japan and France, alongside rising economic uncertainties in the U.S. The swaps market currently anticipates a 95% probability of a 25 basis point rate cut by the Fed at the upcoming October 28-29 FOMC meeting.
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