July 6, 2023: Dollar Rises while Gold Stabilizes Following Fed Minutes Release

The dollar rose amid expectations of a US interest rate hike.

 On Thursday, July 6, the dollar rose widely following the release of the latest Federal Reserve policy meeting minutes, which strengthened expectations of interest rate hikes this month.

The minutes of the Federal Reserve’s June meeting, released yesterday (Wednesday), revealed that most policymakers expect further tightening of US monetary policy, even after agreeing to keep interest rates steady last month. This led to a slight increase in the dollar and Treasury bond yields.

  • EUR/USD: The euro touched its lowest level in a week at $1.0843 in early Asian trading, while the pound fell 0.08% to $1.26925.
  • DXY: The dollar index rose 0.04% to 103.38 points.
  • USD/JPY: The yen strengthened by over 0.2% to 144.30 against the dollar as concerns about potential intervention by Japanese authorities to support the currency and curb its decline emerged.
  • AUD/USD: The Australian dollar declined by 0.04% to $0.6651 after dropping over 0.5% in the previous session.
  • USD/CNY: The Chinese yuan recorded 7.2593 against the dollar in the offshore market after falling about 0.4% in the previous session.

Gold stabilizes as investors await US economic data.

On Thursday, July 6, gold stabilized as investors awaited a series of US economic data that could impact the US Federal Reserve monetary policy following the Fed’s June meeting minutes, which supported expectations of an extended period of interest rate hikes.

Spot gold remained steady at $1,919.90 per ounce, while US gold futures declined by 0.05% to $1,926.2.

US interest rate increases highly influence gold because higher rates increase the opportunity cost of holding the non-yielding metal.

The Fed meeting minutes showed that they agreed to keep interest rates steady at the June meeting to buy time and evaluate whether there is a need for further rate hikes.

Market participants are also closely monitoring developments regarding Chinese restrictions on importing important metals in the semiconductor industry ahead of US Treasury Secretary Janet Yellen’s Thursday visit to Beijing.

As for other precious metals, silver rose by 0.43% in spot trading to $23.20 per ounce, while palladium declined by 0.65% to $1,220.00 and platinum rose by 0.11% to $917.00.

Meta stock jumps to its highest level in 17 months, while UPS stock records its largest daily loss in two months.

US indices closed with slight declines on Wednesday after the latest Federal Reserve meeting amid anticipation of important economic data in the coming days.

The meeting revealed that the Fed agreed to keep interest rates steady at the June meeting to buy time and assess the need for further rate hikes.

Following the expected release of the minutes, investors still largely expect the central bank to raise interest rates at its upcoming meeting in July.

Key economic data will be released before the meeting, including the US monthly jobs report on Friday.

After three consecutive sessions of gains, the Dow Jones index declined by about 0.4%, or around 130 points, closing below the 34,300 level.

The S&P 500 index declined by approximately 0.2% from its 14-month highs.

The Nasdaq Composite Index decreased by around 0.2% from its highest close in 15 months.

  • Meta stock:

Meta stock jumped by about 2.9%, achieving its highest close in 17 months and adding around $21 billion to its market value in a single day.

These gains came ahead of the expected release of Meta’s competitor application to Twitter, called Threads.

  • UPS stock:

UPS stock declined by 2.1%, marking its largest daily loss two months after the Teamsters Union announced that UPS had withdrawn from negotiations for a new contract, which the shipping giant denied.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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