The dollar index rose by +0.30% on Monday due to concerns about accelerating prices potentially preventing a Fed rate cut next month. The US Aug NAHB housing market index unexpectedly fell -1 to 32. Foreign investor concern over US monetary policy and a politically-driven Fed are limiting dollar gains. Markets await Trump-EU meeting outcomes for macroeconomic implications. Inflation outlook adjustments continue following Thursday’s PPI report, reducing Fed rate cut expectations. Federal funds futures price in an 84% chance of a -25 bp rate cut in September and 51% in October.

EUR/USD fell by -0.32% on Monday on dollar strength, impacted by doubts about an end to the Russian-Ukrainian war. Swaps indicate a 6% chance of a -25 bp rate cut by the ECB in September. USD/JPY rose by +0.47% due to dollar strength, with concerns over US tariff policies affecting the Japanese economy. The Japanese Jun tertiary index rose +0.5% m/m, exceeding expectations.

December gold closed down -0.14% and September silver closed up +0.14% on Monday, with precious metals settling mixed. Gold prices fell to a 2-week low due to dollar strength and higher T-note yields. Precious metals have seen support from safe-haven demand following geopolitical tensions. Gold prices are under pressure due to reduced Fed rate cut chances. Gold continues to have safe-haven support related to US tariffs and geopolitical risks.

Read more at Yahoo Finance: Dollar Supported by Higher T-Note Yields