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The dollar index (DXY) fell to a 2-week low, down by 0.29%, amid speculation that the reopening of the U.S. government will reveal delayed economic reports indicating a weakening economy, potentially leading the Fed to continue cutting interest rates. This comes as markets are pricing a 53% chance of a 25 basis point cut at the next FOMC meeting on December 9-10.
Meanwhile, the euro (EUR/USD) rose to a 2-week high, up 0.28%, supported by central bank divergence as the ECB is largely finished with its rate-cut cycle. Eurozone industrial production for September increased by 0.2% month-on-month, below expectations of 0.7%. Additionally, Japan’s producer prices rose by 0.4% month-on-month, stronger than the anticipated 0.3%, benefiting the yen (USD/JPY), which is down 0.17% today.
Precious metals experienced a downturn, with December gold (GCZ25) decreasing by 0.24% and silver (SIZ25) down 0.74%, following hawkish comments from Fed officials that reduced the likelihood of a rate cut. Central banks remain active buyers, with China’s PBOC increasing gold reserves to 74.09 million troy ounces in October, marking the twelfth consecutive month of boosts.
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