The dollar index (DXY) decreased by 0.24% on Wednesday after reaching a 6-week high earlier in the day. This drop followed President Trump’s comments about the United States being in the “final stages” with Iran, which contributed to a more than 5% decline in crude oil prices, leading to lower inflation expectations and potential easing of monetary policy by the Fed. The minutes from the April 28-29 FOMC meeting, indicating a possible interest rate increase due to persistent inflation, supported the dollar but were overshadowed by the day’s events.
In the foreign exchange market, the euro (EUR/USD) rose by 0.23%, recovering from a 6-week low as optimism grew regarding the Eurozone economy in light of falling oil prices. The ECB is anticipated to possibly raise rates, with an 82% probability of a +25 basis point hike at the June 11 meeting, according to swaps markets. Additionally, the Japanese yen (USD/JPY) fell by 0.15% amid lower T-note yields, while Japanese Finance Minister Satsuki Katayama suggested an intervention to support the yen if it approaches 160 per dollar.
In commodities, June COMEX gold closed up 0.53%, and July COMEX silver rose by 1.36% on Wednesday, rebounding as the dollar weakened. Central bank demand for gold remains robust, with China’s PBOC gold reserves increasing by 260,000 ounces to 74.64 million ounces in April—the largest monthly increase in a year. Overall, market sentiment was influenced by strong equities and lower safe-haven demand for precious metals.
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