The dollar index fell to a 2-week low, down -0.29%, on the speculation that the US government reopening will reveal a weakening economy, possibly leading to more interest rate cuts by the Fed. Losses are limited after hawkish comments from Fed officials favoring steady rates. Markets anticipate a 53% chance of a rate cut in December.

EUR/USD rose to a 2-week high, up +0.28%, as the weaker dollar supports the euro. The ECB is seen as finishing its rate-cut cycle, while the Fed is expected to cut rates further. Eurozone industrial production rose less than expected, limiting euro gains. Swaps predict a 3% chance of an ECB rate cut in December.

USD/JPY is down -0.17% as the yen strengthens from a recent low against the dollar. Positive Japanese producer price data supports the yen, along with potential government intervention to stabilize the currency. Concerns about Japanese political uncertainty and fiscal policy negatively impact the yen, with markets discounting a 34% chance of a BOJ rate hike in December.

Precious metals prices turned lower after T-note yields rose on Fed comments favoring steady rates, reducing the likelihood of a rate cut in December. Metals initially rose on speculation of a weakening US economy prompting rate cuts. Strong central bank demand for gold supports prices, with global central banks increasing gold reserves.

Since mid-October, long liquidation pressures have weighed on precious metals prices, with ETF holdings falling after reaching 3-year highs. Central bank demand for gold remains strong, with China’s PBOC and other banks increasing gold reserves. The market continues to watch for geopolitical risks, central bank actions, and Fed policy decisions.

Read more at Yahoo Finance: Dollar Retreats as the US Government Reopens