The U.S. dollar index (DXY) decreased by 0.10% amid a 2% drop in WTI crude oil prices, which contributed to a 3.5 basis point decline in the 10-year Treasury note yield. Following the August Consumer Price Index (CPI) report released today, odds for a 25 basis point rate hike by the Federal Open Market Committee (FOMC) next week increased to 88% from 75%. The August CPI showed a month-over-month increase of 0.4%, aligning with expectations, while the core CPI rose by 0.3%, exceeding the forecast of 0.2%.
In other economic news, the University of Michigan’s preliminary September consumer sentiment index fell by 3.9 points to 47.8, significantly below expectations. On the oil front, prices saw a decline following warnings from the International Energy Agency about the largest drop in global oil demand this year since the COVID-19 pandemic. Saudi Arabia reported that its crude production in August fell to 6.238 million barrels per day, the lowest level since 1990.
Market predictions indicate a 97% chance of a 25 basis point rate hike by the Bank of Japan at its September 18 meeting, as expectations rise amid inflation trends. Precious metals prices increased today, supported by a weakening dollar; however, gold and silver face pressure from the stronger-than-expected U.S. CPI and FOMC rate hike prospects.
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