The dollar index fell by -0.12% on Tuesday, pressured by the 2-day FOMC meeting and the 10-year T-note yield decline. The ongoing US government shutdown also weighs on the dollar, increasing the likelihood of rate cuts if it continues. Strong US economic reports, however, briefly supported the dollar’s strength.

Markets expect a -25 bp rate cut by the FOMC, with further cuts anticipated in December. The Fed may halt quantitative tightening, benefiting stock and bond markets. The Aug FHFA US house price index and S&P Cotality CS US 20-city house index both exceeded expectations. The Oct Richmond Fed manufacturing index rose, while US consumer confidence fell slightly.

The US and China reached a tentative trade agreement, reducing safe-haven demand and supporting the dollar. Treasury Secretary Mnuchin stated the US tariff threat on Chinese imports is off the table. Progress was made on rare earth metals, soybeans, fentanyl, and TikTok. EUR/USD rose, driven by dollar weakness, and the euro benefits from ECB-Fed rate divergence.

USD/JPY fell due to increased confidence in Japan’s political and trade position. The Bank of Japan is expected to keep its policy rate unchanged. Precious metals prices fell due to reduced safe-haven demand from the US-China trade agreement. However, they still have support from the US government shutdown, geopolitical risks, and Fed rate cut expectations. ETF outflows are pressuring prices.

Precious metals prices are influenced by various factors, including the ongoing US government shutdown, geopolitical risks, and Fed rate cut expectations. ETF outflows are impacting prices, with gold and silver ETF holdings decreasing.

Read more at Yahoo Finance: Dollar Trades Slightly Lower Ahead of FOMC Meeting Results