The dollar index rose by +0.29% on Wednesday, rebounding from a nearly 4-year low, thanks to Treasury Secretary Bessent’s statement that the US won’t intervene to support the yen. The FOMC kept interest rates unchanged, and Fed Chair Powell signaled no immediate rate changes.

FOMC voted 10-2 to keep the fed funds target range at 3.50%-3.75%. Economic activity is solid, with somewhat elevated inflation. Job gains are steady, and the unemployment rate is stabilizing. No mention of increased downside risks to employment.

Fed Chair Powell says the Fed is in a good position and will wait for more data before deciding on interest rates. The economy’s strength has surprised, with a disconnect between surveys and spending.

The dollar hit a 4-year low after President Trump’s comments on its weakness. Foreign investors are pulling capital amid political risks. Uncertainty over Greenland and threats of tariffs on Canada add pressure.

USD/JPY rose by +0.81% on Wednesday, with the yen weakening from a 2.75-month high. Safe-haven demand lessened with a Nikkei rally and higher T-note yields. Speculation on FX intervention and US-Japan relations also contributed.

Gold and silver rallied on Wednesday, with gold hitting a record high. Trump’s dollar comments boosted demand. Precious metals benefit from safe-haven demand due to geopolitical risks and concerns over US policies.

Central bank demand for gold remains strong, with China’s PBOC boosting reserves. Global central banks bought 220 MT of gold in Q3. Fund demand for precious metals is high, with long holdings in ETFs reaching multi-year highs.

The markets are discounting a 14% chance of a -25 bp rate cut at the next policy meeting. The FOMC is expected to cut rates by about -50 bp in 2026, while the BOJ may raise rates by +25 bp. EUR/USD fell on dovish ECB comments and positive economic news from Germany.

Read more at Yahoo Finance: Dollar Gains as FOMC Holds Interest Rates Steady