Dollar Rebounds on an Upbeat Fed Beige Book

Economic Outlook - The US economy is demonstrating "resilience," with Minneapolis Fed President Neel Kashkari indicating no current impetus for the Fed to cut interest rates this month [1] - The November PPI final demand increased by 3.0% year-over-year, surpassing expectations of 2.7% [1] - The dollar found support from stronger-than-expected US economic data, including retail sales and producer prices [1] Federal Reserve Insights - The Fed Beige Book reported a slight to modest pace of economic activity growth across most regions since mid-November, marking an improvement from previous reports [2] - Philadelphia Fed President Anna Paulson anticipates inflation moderating and growth around 2% this year, suggesting modest rate adjustments may be appropriate later in the year [3] - Markets are currently pricing in a 5% chance of a 25 basis point rate cut at the upcoming FOMC meeting on January 27-28 [3] Currency Market Dynamics - The dollar index fell by 0.03% on Wednesday, pressured by a rally in the yen and concerns regarding Fed independence [2] - The dollar is expected to face ongoing weakness as the FOMC is projected to cut interest rates by approximately 50 basis points in 2026 [4] - The dollar is under pressure due to increased liquidity measures by the Fed, including a $40 billion monthly purchase of T-bills [5] Precious Metals Market - Precious metals, including gold and silver, surged due to rising tensions in Iran and safe-haven demand, with gold reaching an all-time high of $4,635.00 per ounce [11][12] - Strong central bank demand for gold is evident, with China's PBOC reserves increasing by 30,000 ounces to 74.15 million troy ounces in December [17] - Fund demand for precious metals remains robust, with gold and silver ETF holdings reaching multi-year highs [18]