The dollar index (DXY00) rose by +0.02% on Friday, recovering from early losses due to a rally in stocks reducing liquidity demand. Expectations of a Fed rate cut at next week’s FOMC meeting also pressured the dollar, but it recovered after a positive US consumer sentiment index report.

President Trump plans to announce the new Fed Chair in early 2026, with Kevin Hassett seen as the likely choice. Hassett’s nomination could be bearish for the dollar, raising concerns about Fed independence. The market expects a 25 bp rate cut at the next FOMC meeting.

US Sep personal spending and income met expectations, while the core PCE price index rose as expected. The University of Michigan reported a rise in consumer sentiment but a decrease in inflation expectations, all contributing to market expectations of a Fed rate cut.

EUR/USD (^EURUSD) fell by -0.03% on Friday, as the euro gave up gains due to the dollar’s recovery. Divergent central bank policies favor the euro, with the ECB done with rate cuts while the Fed is expected to continue cutting. Eurozone GDP and German factory orders showed strength.

USD/JPY (^USDJPY) rose by +0.13% on Friday, with the yen falling as T-note yields increased. Reports on Japan’s household spending and the leading index influenced yen movement. The market anticipates a BOJ rate hike at the upcoming policy meeting.

Gold and silver prices settled mixed on Friday, with silver hitting a new high. Precious metals found support from inflation data and carryover from copper’s rally. Gold’s safe-haven appeal was dampened by a stronger S&P 500 and higher bond yields.

Precious metals have support from expectations of a Fed rate cut and safe-haven demand due to geopolitical risks. Silver specifically benefits from tight Chinese inventories. Central bank demand for gold remains strong, with China and global central banks increasing reserves.

Read more at Yahoo Finance: Dollar Recovers Early Losses as Bond Yields Rise