Once the Fed Rate Cut news is released, the US dollar, precious metals, and Exchange Rate are all moving.

The US dollar slightly pulls back, and interest rate cut expectations rise

The US Dollar Index ( DXY ) fell slightly by 0.03% on Monday, primarily impacted by the dovish remarks from Fed Vice Chairman Waller—who publicly supported a rate cut in December. This statement directly surged the market's pricing for a rate cut at the December FOMC from 30% to 80%. At the same time, the rebound in the stock market also diverted the safe-haven demand for the dollar.

Euro rises on momentum, but German data holds it back

EUR/USD rose by 0.12%. The strengthening of the euro is primarily due to two forces: first, the weakening of the dollar; second, the improved prospects for peace in Ukraine - NATO Secretary General Rutte stated that Russia is “unable to negotiate” due to battlefield losses and a monthly loss of 20,000 troops, making a peace agreement possible. However, Germany's IFO Business Confidence Index unexpectedly fell to 88.1 in November (expected 88.5), putting a brake on the euro's gains. The probability of an interest rate cut by the ECB in December is only priced in at 2% by the market.

Yen under pressure as Japan's stimulus policies raise borrowing concerns

USD/JPY rose by 0.26%. The Japanese government announced a stimulus plan of 177 billion yen (1120 billion USD ) last week, which is larger than the previous prime minister Kishida's plan of 139 billion yen ( last year. This has heightened market concerns about Japan's debt burden, putting pressure on the yen which is nearing a 10-month low. The probability of the Bank of Japan raising interest rates on December 19 is only 16%.

Gold and silver rebound, central banks continue to buy is the confidence

Gold spot rose 0.36%, and silver rose 0.83%. They reversed from the early session's decline, mainly relying on Waller's dovish remarks—rising expectations for interest rate cuts enhanced the appeal of precious metals as a store of value. Additionally, three factors continue to support prices: 1) China's central bank's gold reserves increased for 12 consecutive months to 74.09 million ounces in October; 2) global central banks purchased 220 tons of gold in Q3, a 28% increase month-on-month; 3) U.S. tariffs and geopolitical uncertainties maintain safe-haven demand.

However, since the historical high in mid-October, profit-taking by bulls and pressure from ETF de-risking have been weighing on the gains of precious metals.