Dollar Pressured by US Government Shutdown Concerns

Economic Indicators - The US November factory orders rose by +2.7% month-over-month, exceeding expectations of +1.6% and marking the largest increase in six months [2] - The US November trade deficit widened to -$56.8 billion, larger than the expected -$44.0 billion and the largest deficit in four months [2] - US weekly initial unemployment claims fell by -1,000 to 209,000, indicating a slightly weaker labor market than the expected 205,000, while continuing claims decreased by -38,000 to a six-month low of 1.827 million, showing a stronger labor market than anticipated [3] Currency Market Dynamics - The dollar fell to a nearly four-year low after President Trump expressed comfort with its recent weakness, contributing to foreign investors pulling capital from the US amid political risks [2] - The dollar index (DXY) decreased by -0.14% amid concerns of a potential US government shutdown and renewed US-Iran tensions [5] - The dollar's underlying weakness is expected to persist as the Federal Open Market Committee (FOMC) is projected to cut interest rates by about -50 basis points in 2026, while the Bank of Japan (BOJ) is expected to raise rates by +25 basis points [6] Precious Metals Market - Precious metals prices surged due to a weaker dollar and renewed US-Iran tensions, with gold reaching a record nearest-futures high of $5,586.20 an ounce [11] - Strong central bank demand for gold was noted, with China's PBOC reserves increasing by +30,000 ounces to 74.15 million troy ounces in December, marking the fourteenth consecutive month of increases [15] - Fund demand for precious metals remains robust, with long holdings in gold and silver ETFs climbing to a 3.5-year high [16]