The dollar index fell by -0.43% due to increased chances of a Fed rate cut after the CPI report. July US CPI report was +0.2% m/m, +2.7% y/y, and core CPI was +0.3% m/m, +3.1% y/y. 10-year T-note yield rose +0.4 bp on concerns about a Trump attack on Fed Chair Powell.

President Trump extended tariff truce with China for 90 days. He will impose a 100% tariff on semiconductor imports and double tariffs on US imports from India to 50%. US tariffs on pharmaceutical imports will be announced soon. Average US tariff may rise to 15.2%.

Federal funds futures price in a -25 bp rate cut at 96% for the September FOMC meeting. EUR/USD rose by +0.52%, but sentiment remains cautious due to US tariffs. Swaps price in a 5% chance of a -25 bp rate cut by the ECB. USD/JPY fell by -0.30% despite dollar weakness.

December gold closed down -0.17%, and September silver closed up +0.57%. Gold prices fell due to Trump’s statement on gold tariffs and a small rise in the 10-year T-note yield. However, gold saw support from increased chances of a Fed rate cut and geopolitical risks.

Fund buying of precious metals supports prices as gold holdings in ETFs rose to a two-year high, and silver holdings reached a three-year high. Rich Asplund did not have positions in the securities mentioned. Information is for informational purposes only.

Read more at Yahoo Finance: Dollar Falls as CPI Report Boosts Chances of a Fed Rate Cut