HomeForexDollar index declines as stocks surge and Fed maintains accommodative stance, impacting...

Dollar index declines as stocks surge and Fed maintains accommodative stance, impacting currency performance.

Dollar Weakens Amid Stock Market Rally and Dovish Fed Stance

Stock Market Rally and Dovish Fed Stance Influence Dollar

The dollar weakened by 0.23% on Tuesday, influenced by a stock market rally and Atlanta Fed President Bostic’s dovish stance on further interest rate hikes. Despite safe-haven demand spurred by Middle East turmoil, the dollar experienced a drop. Bostic expressed confidence that the current policy rate is sufficient to bring inflation down to 2%.

European Currency Strengthens on Dollar Weakness

In contrast, the European currency rose by 0.24% on Tuesday. This increase was triggered by the dollar’s weakness, hawkish signals from the European Central Bank’s Holzmann about potential interest rate hikes following supply shocks, and an unexpected increase in Italy’s industrial production.

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Yen Gains as Safe-haven Demand Decreases

The Japanese yen also saw an increase of 0.13% on Tuesday as it weakened due to reduced safe-haven demand. This decrease in demand followed a substantial rally in the Stock Index and a decline in Japanese government bond yields.

Precious Metals Continue to Rise

Meanwhile, gold and silver prices rose for the third consecutive day. These increases were driven by factors such as a weaker dollar, dovish comments from Bostic, and a decrease in the 10-year Treasury note yield. The prices of precious metals were buoyed by these factors, marking a continuation of gains from previous days.

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