The dollar index (DXY) fell by 0.32% on Tuesday, driven by U.S. June consumer prices rising less than expected, easing inflation concerns and lowering the likelihood of a Federal Reserve interest rate hike from 43% to 17% ahead of the upcoming FOMC meeting on July 28-29. The Consumer Price Index (CPI) rose 3.5% year-on-year in June, down from 4.2% in May, below the anticipated 3.8%.
Fed Chair Warsh described the U.S. economy as resilient while signaling a strict approach to inflation, stating that the Fed has “no tolerance” for persistently high inflation. Additionally, as tensions escalated in the Middle East, leading to another round of U.S. strikes against Iran, the dollar experienced a temporary rebound due to increased demand for safe-haven assets.
In related developments, gold prices increased 1.6% after the CPI report, with holdings in gold ETFs reaching a 9.5-month low, and China’s gold reserves rose by 320,000 ounces in May, marking the largest increase in 17 months.
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