The dollar index (DXY) fell to -0.21% from a 1.25-month high today, influenced by a decrease in crude oil prices following the U.S. proposal to temporarily waive sanctions on Iranian oil. This decline is expected to lower inflation pressures and affect Federal Reserve policy. The May NAHB housing market index unexpectedly rose by 3 points to 37, contrasting expectations of no change.
In a related development, Pakistan deployed 8,000 troops and fighter jets to Saudi Arabia amidst heightened geopolitical tensions, boosting safe-haven demand for the dollar temporarily. However, the euro gained 0.15% as the dollar waned, while swaps markets predict an 86% chance of a 25 basis point rate hike by the ECB on June 11.
Meanwhile, gold and silver prices increased after an early slump, supported by declining crude oil prices. Gold’s long positions fell to a 5.25-month low, but China’s central bank increased its gold reserves by 260,000 ounces to 74.64 million troy ounces, marking the largest monthly rise in a year. Additionally, Chinese industrial production growth of 4.1% year-over-year fell short of the 6.0% expectation.
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