The dollar index (DXY00) is up +0.07%, recovering from early losses after St. Louis Fed President Alberto Musalem expressed optimism about the US economy bouncing back. Higher T-note yields are also boosting the dollar.

Optimism about the US government shutdown ending pressured the dollar today. Senate Democrats voting with Republicans to reopen the government could reveal economic weakness, prompting further Fed rate cuts. Stock market strength has reduced dollar demand.

San Francisco Fed President Mary Daly stated that tariffs have not significantly impacted services inflation or expectations, remaining around the 2% target. St. Louis Fed President Alberto Musalem expects a substantial US economic rebound in the first quarter.

Markets are pricing in a 63% chance of a 25bp rate cut by the FOMC in December. EUR/USD (^EURUSD) is down -0.10% due to a stronger dollar and a drop in the Eurozone Nov Sentix investor confidence index.

The Eurozone Nov Sentix investor confidence index unexpectedly fell to -7.4, lower than expected. Swaps are indicating a 4% chance of a 25bp ECB rate cut in December.

USD/JPY (^USDJPY) is up +0.44% as the yen weakens on potential fiscal policy changes by Japanese Prime Minister Takaichi. T-note yields are also pressuring the yen. Markets are pricing in a 49% chance of a BOJ rate hike in December.

December COMEX gold (GCZ25) is up +2.19% and December COMEX silver (SIZ25) is up +3.70%, reaching multi-week highs. Precious metals are soaring amidst speculation about the US economy weakening and possible Fed rate cuts. Central bank demand and geopolitical risks are also contributing to the rally.

Read more at Yahoo Finance: Dollar Recovers Early Losses on Hawkish Fed Comments