The dollar index fell by -0.90% on Friday, hitting a 3.5-week low due to dovish comments from Fed Chair Powell. T-note yields also dropped, with a -25 bp rate cut expected at the September FOMC meeting. EUR/USD rose by +0.97% as the euro rallied against the weakening dollar. German Q2 GDP was revised lower.

US Vice President Vance is working on peace negotiations between Russia and Ukraine, hoping to set up a meeting between Putin and Zelensky. The outcome could impact tariffs, oil prices, and European security. Swaps show a 2% chance of a -25 bp rate cut by the ECB in September.

USD/JPY fell by -1.01% as the yen rebounded against the dollar, supported by lower T-note yields. Japan’s Jul national CPI eased to +3.1% y/y. Precious metal prices rose sharply on Friday, with gold and silver hitting highs. Safe-haven demand increased due to US political uncertainty and geopolitical risks. Fund buying of precious metals also supported prices.

Read more at Yahoo Finance: Dollar Sinks as Fed Rate Cut Expectations Increase