The dollar index fell from a 5.25-month high, down -0.05% as stocks rebounded on Wednesday, eroding liquidity demand for the dollar amid the ongoing US government shutdown. Stronger ADP employment and ISM services index data initially boosted the dollar before its decline. The Fed is still expected to cut rates.

Eurozone economic news buoyed the euro as the Oct S&P composite PMI was revised up to 52.5, and German factory orders surged. The dollar’s weakness and easing producer price pressures in the Eurozone lifted the euro, despite the Sep PPI decline. Central bank divergence favors the euro over the dollar.

USD/JPY rose by +0.28% as the yen weakened against the dollar, remaining above recent lows. Dovish BOJ minutes and higher T-note yields weighed on the yen. Japanese political uncertainty and delayed BOJ rate hikes contribute to the yen’s weakness. Markets predict a 50% chance of a BOJ rate hike in December.

Precious metals rallied as safe-haven demand increased amid the US government shutdown, geopolitical risks, and central bank buying. Rising inflation expectations and strong demand for industrial metals supported gold and silver prices. The dollar’s rally and stock rebound limited gains, while higher T-note yields were bearish for precious metals.

Read more at Yahoo Finance: Dollar Gives Up Early Gains as Stocks Rebound