On Thursday, the dollar index (DXY) fell by 0.40%, pressured by a stronger yuan reaching a 9.5-month high against the dollar. Concerns regarding the Federal Reserve’s independence, particularly following President Trump’s move to potentially fire Fed Governor Lisa Cook, have raised fears of capital flight. The S&P 500 also hit a new record high, decreasing demand for the dollar. Despite this, the U.S. economy appears resilient, with Q2 GDP revised upward to 3.3% from 3.0%, and weekly initial unemployment claims decreasing by 5,000 to 229,000.
In the Eurozone, the euro rose by 0.41% due to dollar weakness, spurred by new car registrations increasing by 7.4% year-over-year. The economic confidence indicator for August, however, unexpectedly fell to 95.2, while swaps are pricing in a 3% chance of a rate cut by the ECB at the upcoming policy meeting. In Asia, the yen strengthened by 0.38% amid a weaker dollar, supported by hawkish comments from the Bank of Japan.
Precious metals saw gains, with gold rising to a 2.5-week high and silver to a 5-week high, largely driven by the dollar’s decline and geopolitical uncertainties, including the situation in Ukraine. Gold and silver ETF holdings have reached two-year and three-year highs, respectively, reflecting increased demand for safe-haven assets.
