The US Dollar Index increased on Monday due to stronger-than-expected US economic data and speculation that the Federal Reserve (Fed) might not cut interest rates as aggressively as previously anticipated. The swaps market now discounts a 31% chance of a 50-basis-point rate cut at next week's FOMC meeting, down from 50% following the US jobs report last Friday. Additionally, the rise in US stocks has drawn liquidity demand away from the US dollar.

The market is currently pricing in a 100% chance of a 25-basis-point rate cut by the Fed at the FOMC meeting on September 17-18, with a 31% chance of a 50-basis-point rate cut at that meeting.

The US dollar faced pressure on Monday due to the unexpected drop in the Eurozone investor sentiment index (Sentix) to its lowest level in 8 months. Additionally, expectations that the European Central Bank (ECB) will cut interest rates by 25 basis points at its policy meeting on Thursday are putting pressure on the euro.

The USD/JPY exchange rate closed up 0.39% on Monday. The yen was under pressure due to an unexpected downward revision of Japan's Q2 GDP. Moreover, the drop in the Nikkei stock index to a one-month low on Monday spurred some safe-haven demand for the yen. Higher Treasury yields on Monday also pressured the yen.

Metals rose in the first session of the week despite some pressure from the stronger US dollar. However, weaker-than-expected August CPI and PPI reports from China have bolstered the chance of further monetary easing by the People's Bank of China (PBOC), which supports precious metals.

• December silver contracts rose nearly 1.7% from the previous weekend, with a settlement price on September 9 of $28.651 per troy ounce.

• October platinum contracts surged, with a settlement price on September 9 of $246.9 per troy ounce, up more than 3% from the previous session.

• October copper contracts increased by over 1.7% from the weekend, with a settlement price on September 9 of $4.102 per pound.

Source: Barchart