The dollar index is down slightly by -0.03% today after the Dec Dallas Fed manufacturing outlook unexpectedly declined. The markets are pricing in a 19% chance of a -25 bp rate cut at the FOMC’s next meeting. The dollar is expected to see weakness as the FOMC is likely to cut rates by -50 bp in 2026.

US Nov pending home sales rose +3.3% m/m, beating expectations. Meanwhile, the Dec Dallas Fed manufacturing outlook fell -0.5 to -10.9 against expectations. EUR/USD is up +0.02% today, recovering from losses. Swaps are pricing in a 0% chance of a +25 bp rate hike by the ECB in February.

USD/JPY is down -0.22% today as the yen strengthens against the dollar. The yen is supported by signals that further rate increases are likely from the BOJ. Gold and silver prices are sharply lower today, impacted by the BOJ’s meeting summary. Precious metals also face pressure from raised margin levels for trading.

Geopolitical concerns continue to support precious metals prices. Factors like the FOMC’s liquidity injection and uncertainty over US tariffs contribute to the bullish outlook for precious metals. Central bank demand for gold remains strong, with China’s PBOC increasing its reserves. Fund demand for precious metals is also high, with long holdings in gold and silver ETFs climbing to multi-year highs.

Read more at Yahoo Finance: Dollar Little Changed and Precious Metals Plunge on Long Liquidation Pressures