The dollar index rose to a three-week high of +0.15% today amid heightened geopolitical risks in Venezuela following the US capturing President Maduro. Comments from Minneapolis Fed President Neel Kashkari, indicating US interest rates may be nearing neutral, also supported the dollar. However, the index retreated after the US ISM manufacturing index unexpectedly fell to 47.9 in December, marking its steepest contraction in 14 months.
In currency markets, the EUR/USD dropped by -0.19%, influenced by lower German bund yields, while USD/JPY decreased by -0.10% as the yen recovered from a two-and-a-half-week low, bolstered by hawkish remarks from BOJ Governor Ueda. The yen was also supported by a rise in Japan’s 10-year JGB yield to 2.129%, the highest in 27 years.
Gold prices surged, with February COMEX gold up +3.04%, driven by safe-haven demand amidst geopolitical tensions. The Philadelphia Fed President’s dovish outlook on interest rates added more appeal for precious metals. Additionally, China’s central bank gold reserves increased by +30,000 ounces, contributing to strong demand, alongside a notable rise in long holdings for both gold and silver ETFs.
