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Dollar Loses Steam as Market Dynamics Shift; Oil and Gold Advance

2 weeks ago

The dollar edged lower for a third consecutive session, with the once-dominant “Trump trade” that had propelled the greenback and lifted US Treasury yields losing traction. Market attention now turns to the Trump administration’s economic team, as reports suggest Kevin Warsh, a former Federal Reserve governor, is being considered for Treasury Secretary alongside hedge fund manager Scott Bessent for the role of National Economic Council director.

The yen rallied against all Group-of-10 currencies, recovering from recent declines. Japanese Finance Minister Katsunobu Kato reiterated the government’s commitment to countering excessive currency volatility, fueling speculation that further yen strength could prompt intervention from Japan’s Ministry of Finance to stabilize the currency.

In the Asia-Pacific region, the Australian dollar extended its gains into a third day following the release of minutes from the Reserve Bank of Australia’s (RBA) latest meeting. Policymakers maintained their current monetary settings, signaling a focus on addressing persistently elevated core inflation. The RBA’s confidence in its existing stance supported a bullish tone for the Aussie.

Commodities saw renewed momentum as oil prices stabilized in Asian trading. Brent crude traded above $73 a barrel, following a 3.2% surge on Monday—the largest daily gain in over five weeks—driven by dollar weakness and a broader risk-on sentiment. West Texas Intermediate hovered near $69 per barrel. Gold continued its upward trajectory, capitalizing on the dollar’s retreat and persistent demand for safe-haven assets.

As global markets recalibrate, shifts in currency, commodity, and policy landscapes will remain pivotal, with traders closely monitoring developments in the US economic leadership and the interplay of inflationary and monetary pressures worldwide.

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