The dollar index rose by 0.02% on Monday, finding support from stock market weakness and stronger-than-expected pending home sales for November, which increased by 3.3% month-over-month compared to an anticipated 0.9%. However, the dollar’s gains were capped after the Dallas Fed’s manufacturing outlook unexpectedly declined from -0.5 to -10.9, falling short of expectations of -6.0.
Market participants are currently pricing in a 16% chance of a 25 basis point rate cut at the Federal Open Market Committee’s next meeting on January 27-28. The Federal Reserve is expected to implement a 50 basis point cut by 2026, contrasting with a projected 25 basis point increase by the Bank of Japan in 2026.
In commodity markets, February COMEX gold fell by $209.10 (-4.59%) and March COMEX silver dropped by $6.736 (-8.73%), influenced by geopolitical concerns and recent increases in trading margins. Meanwhile, central bank demand remained strong as China’s PBOC gold reserves rose to 74.1 million troy ounces, marking a 30,000-ounce increase in November.
