The dollar index rose by +0.48% to a 1.5-week high following hawkish Fed comments. Political uncertainty in France and Japan benefits the dollar. The ongoing US government shutdown is bearish for the dollar, with potential negative impacts on the economy and GDP growth.

US Aug consumer credit rose by +$0.363 million, weaker than expected. Fed Presidents Schmid and Kashkari emphasized the need to combat high inflation. Markets predict a 93% chance of a -25 bp rate cut at the next FOMC meeting.

EUR/USD fell by -0.50% due to Eurozone economic weakness and political turmoil in France. German Aug factory orders unexpectedly declined -0.8% m/m. Swaps price in a 1% chance of a -25 bp rate cut by the ECB.

USD/JPY rose by +1.00% to a 7.5-month low against the yen. Concerns over Japan’s new Prime Minister’s impact on BOJ policy tightening led to the decline. Japan’s Aug leading index CI rose to 107.4, higher than expected.

Precious metal prices settled mixed on Tuesday, with gold hitting new highs. Safe-haven demand due to the US government shutdown and political turmoil in France supported prices. Hawkish Fed comments and a strong dollar were bearish for metals.

Precious metals receive safe-haven support amid US tariffs and geopolitical risks. Fund buying of precious metal ETFs boosts prices. Weaker US economic data increases the likelihood of Fed rate cuts, supporting precious metal prices.

Read more at Yahoo Finance: Dollar Rises on Hawkish Fed Comments and Euro and Yen Weakness