Dollar Gains as FOMC Holds Interest Rates Steady

Core Viewpoint - The US dollar is experiencing significant pressure due to political uncertainty, potential currency interventions, and economic factors, leading to a decline in its value against other currencies, particularly the yen. Group 1: Currency Market Dynamics - The dollar is under pressure from speculation that the US may coordinate with Japan for FX intervention to support the yen, which aligns with President Trump's view that a weak dollar benefits US exports [1] - The dollar fell to a nearly 4-year low as President Trump expressed comfort with its weakness, while foreign investors are withdrawing capital due to political risks [3] - The dollar index rose by +0.29% after Treasury Secretary Bessent stated the US would not intervene in the currency market, indicating a temporary rebound [6] Group 2: Political and Economic Influences - Political uncertainty is affecting the dollar, particularly after President Trump threatened 100% tariffs on imports from Canada if a trade agreement with China is signed [2] - The risk of a partial US government shutdown is also weighing on the dollar, with Senate Democrats threatening to block funding deals [7] - The Federal Reserve's decision to keep interest rates unchanged reflects a solid pace of economic activity, but job gains remain low, contributing to the dollar's weakness [5] Group 3: Precious Metals Market - Precious metals, particularly gold and silver, are gaining traction as safe-haven assets amid US political uncertainty and large deficits, with gold reaching a record high of $5,323.40 an ounce [13] - Central bank demand for gold is strong, with China's PBOC increasing its reserves for the fourteenth consecutive month, and global central banks purchasing 220 MT of gold in Q3, up +28% from Q2 [15] - Fund demand for precious metals remains robust, with long holdings in gold and silver ETFs reaching a 3.5-year high [16]