The dollar index rose to a 2.25-month high on Thursday by +0.63% due to higher bond yields and stock weakness. Fed Governor Michael Barr’s hawkish comments accelerated dollar gains. Political risks in France and Japan benefited the dollar. The ongoing US government shutdown is bearish for the dollar.

Fed Governor Barr advocated caution with further rate cuts due to potential inflation from tariffs. New York Fed President Williams supports lower rates this year if the economy evolves as expected. Markets are pricing in a 95% chance of a -25 bp rate cut at the next FOMC meeting.

EUR/USD fell to a 2.25-month low by -0.64% on Thursday due to dollar strength and weaker German trade news. Political uncertainty in France also impacted the euro. The account of the ECB’s meeting was slightly hawkish and supportive for the euro.

USD/JPY rose by +0.30% on Thursday as the yen fell to a 7.75-month low against the dollar due to concerns over Japan’s new Prime Minister and higher T-note yields. Japan’s Sep machine tool orders rose +9.9% y/y, the biggest increase in six months.

Precious metals dropped on Thursday, with gold and silver closing lower. Dollar strength and hawkish comments from Fed Governor Barr contributed to the sell-off. Precious metals have surged recently due to safe-haven demand and political uncertainties. Fund buying of ETFs also supports precious metals prices.

Read more at Yahoo Finance: Dollar Rallies on Higher Bond Yields and Hawkish Fed Speak