The dollar index (DXY00) rose by 0.17% today, driven by weaker stock performance and a stronger-than-expected July Chicago Fed national activity index, which fell from -0.14 to -0.08 versus an expected -0.09. The dollar’s gains were tempered by a report indicating that the U.S. Treasury plans to utilize its $935 billion Treasury General Account to fund enhanced buybacks of older government securities. Furthermore, WTI crude oil prices dropped over 1%, lowering inflation expectations.
In monetary policy forecasts, markets indicate a 40% probability of a 25 basis points rate hike in the upcoming Federal Open Market Committee (FOMC) meeting on September 15-16, while the European Central Bank anticipates a 96% chance of a similar hike at its September 10 meeting. Additionally, USD/JPY increased by 0.11% today, amidst expectations of a Bank of Japan rate hike in September or October.
In precious metals, October COMEX gold increased by $32.70 to a 3.5-month high, supported by falling crude oil prices and rising long holdings in gold ETFs, which are at a three-month high. However, the stronger dollar limited gold’s gains, while September COMEX silver fell by 1%.
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