The dollar index surged to a 2-week high, fueled by easing global trade tensions and a finalized trade deal between the US and South Korea. President Trump hinted at lowering tariffs on Chinese goods due to the fentanyl crisis. Meanwhile, the FOMC cut interest rates by 25 bp and ended quantitative tightening.

Despite the FOMC rate cut, the dollar gained strength on hawkish comments from Fed Chair Powell. Ongoing US government shutdown pressures the dollar. Markets are pricing in a 69% chance of another rate cut in December. EUR/USD fell due to dollar strength and central bank divergence expectations.

USD/JPY rose as the yen weakened against the dollar, driven by T-note yield jumps post-Powell’s comments. The yen initially gained strength but later fell after positive consumer confidence data. Japan’s Oct consumer confidence index reached a 10-month high.

Gold and silver prices rebounded on Wednesday from recent lows, with gold prices gaining $17.60 and silver up $0.589. Precious metals saw short covering ahead of the FOMC meeting conclusion. However, gold prices dropped after the FOMC rate cut and Powell’s hawkish comments.

Precious metals face downward pressure due to long liquidation, ETF outflows, and reduced safe-haven demand following the US-China preliminary trade agreement. Weak US economic data may lead to more Fed rate cuts, supporting precious metals. Long liquidation and ETF outflows have weighed on prices this week.

Read more at Yahoo Finance: Dollar Rallies on Hawkish Powell