The dollar index fell on Friday after US January consumer prices rose less than expected, sparking speculation of a Fed interest rate cut. Jan CPI increased +2.4% y/y, below expectations. Swaps markets predict a 10% chance of a -25 bp rate cut at the next meeting. The dollar is expected to see further weakness in 2026, with the FOMC cutting rates.

EUR/USD fell slightly on Friday as the 10-year German bund yield dropped, affecting interest rate differentials. The German Jan wholesale price index rose +0.9% m/m, supporting ECB policy. Swaps suggest a 5% chance of a -25 bp ECB rate cut in March.

USD/JPY rose slightly as the yen consolidated gains. The yen hit a 2-week high this week. BOJ comments hint at a possible rate hike this spring. Markets predict a +20% chance of a BOJ rate hike in March.

Gold and silver prices surged on Friday after the weak US Jan CPI report. Precious metals are benefiting from safe-haven demand due to geopolitical risks and dollar debasement. Central bank demand for gold is strong. Increased liquidity in the financial system is boosting demand for precious metals.

Despite recent volatility in precious metals prices, fund demand remains high. Long holdings in gold ETFs hit a 3.5-year high. Long holdings in silver ETFs also rose to a 3.5-year high. Trading exchanges worldwide have raised margin requirements for gold and silver.

Read more at Yahoo Finance: Dollar Finishes Slightly Lower on Tame US Consumer Prices