The dollar index fell by -0.41% on Friday, as the August core PCE price index met expectations, easing inflation concerns. US personal spending rose +0.6% m/m, while personal income increased by +0.4% m/m in August. Richmond Fed President Barkin’s hawkish comments supported the dollar, amid a 90% chance of a -25 bp rate cut in October.

EUR/USD rose by +0.32% on Friday, benefiting from a weaker dollar. The ECB’s monthly report on inflation expectations exceeded forecasts, signaling a hawkish policy stance. The euro also gained support from central bank divergence, with the Fed expected to cut rates further this year.

The ECB’s Aug CPI expectations unexpectedly rose, with a 2.8% 1-year forecast. Swaps indicate a 1% chance of a rate cut at the ECB’s October meeting. USD/JPY fell by -0.20% as the yen rebounded on as-expected US inflation data. Japan’s Sep Tokyo CPI was weaker than expected, impacting BOJ policy.

Precious metals surged on Friday, with gold up +1.01% and silver up +3.42%. A weaker dollar and possible Fed rate cuts boosted prices. Safe-haven demand continued due to US tariffs, Fed uncertainty, and geopolitical risks. Gold ETF holdings reached a 3-year high, supporting prices.

Richmond Fed President Barkin’s comments on limited employment and inflation risks were bearish for gold. Stock market rallies reduced safe-haven demand. Precious metals also benefited from fund buying of ETFs, with gold and silver holdings at multi-year highs.

Read more at Yahoo Finance: Dollar Falls as Inflation Concerns Ease and US Consumer Sentiment Slips