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The dollar index (DXY) fell 0.50% on Wednesday, reaching a 5-week low. This decline was influenced by a weak November ADP employment report, which showed a loss of 32,000 jobs—significantly below the expected gain of 10,000 and the largest drop in over 2.5 years. Consequently, markets are pricing in a 95% chance of a 25 basis point rate cut at the upcoming FOMC meeting on December 9-10.
In other economic indicators, the November ISM services index rose 0.3 points to a 9-month high of 52.6, contrary to expectations for a decline. Meanwhile, U.S. MBA mortgage applications decreased by 1.4%, with a 30-year fixed mortgage rate slipping to 6.32% from 6.40% the previous week. The Eurozone also displayed economic strength, with the S&P composite PMI for November revised upward to 52.8, a 2.5-year high.
On the currency front, EUR/USD increased by 0.40%, while USD/JPY fell 0.45%. Stronger Japanese bond yields and dollar weakness supported the yen’s gains. Precious metals showed mixed responses, with February COMEX gold up 0.28%, while silver closed down 0.14%. Silver inventories in Shanghai fell to their lowest level in a decade, reinforcing concerns about supply.
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