The dollar index rose by 0.20% on Wednesday, reaching a 13-month high, bolstered by a hawkish Federal Open Market Committee (FOMC) stance indicating potential interest rate hikes later this year. However, the dollar retreated after May’s new home sales unexpectedly fell 7.3% month-over-month to 580,000 units, below the expected increase to 640,000. Additionally, the U.S. Q1 current account balance showed a deficit of $225.8 billion, wider than the anticipated $208.9 billion.
The euro fell 0.25%, hitting a one-year low, amid concerns from European Central Bank (ECB) President Christine Lagarde regarding interest rate hikes and the ongoing geopolitical climate. The German IFO business confidence index, however, rose to 85.6, slightly above expectations of 85.5. In Japan, the yen continued to be pressured, trading near a 23-month low against the dollar, as speculation about Bank of Japan (BOJ) policy adjustments continues with a 2% chance of a rate hike expected at the next meeting.
In commodities, gold prices plunged to a 7.5-month low, while silver fell to a 6.5-month low, linked to the dollar’s strength and recent central bank signals about raising interest rates. Notably, China’s People’s Bank of China increased its gold reserves by 320,000 ounces in May, marking the largest monthly gain in 17 months, amidst fluctuations in ETF holdings for both gold and silver.
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