US Dollar Strengthens on Hot Inflation Data

The US Dollar was bolstered by hotter-than-expected domestic inflation data, which fueled speculation about the Federal Reserve's future interest rate path. The dollar index traded near a one-week high, putting pressure on other major currencies like the Euro and British Pound. This economic development, combined with geopolitical concerns, contributed to a faltering performance in Asian markets as traders awaited further US inflation reports.

Focus Remains on Geopolitical Tensions

Geopolitical tensions, particularly concerning US-Iran relations, remained a key factor for market participants, with the US President issuing strong statements toward Iran. However, the President also indicated that trade discussions with China, not the Iran situation, would be the priority at an upcoming summit. The broader uncertainty stemming from Middle East conflict was also cited by international leaders as a reinforcing factor for cautious economic management.

India Raises Tariffs; Silver Demand Supportive

India's government significantly raised its import tariffs on both gold and silver to 15%, a move aimed at reducing precious metals purchases to protect the nation's foreign exchange reserves. In separate market action, silver prices continued to advance for a sixth consecutive day, with reports attributing the strength to rising industrial demand for the metal.

Diverging Outlooks from Global Central Banks

Central bank policy expectations diverged globally, with the Reserve Bank of Australia maintaining a hawkish stance. In New Zealand, a central bank survey showed a quarterly rise in two-year inflation expectations. Separately, the OECD projected that the Bank of Japan could raise its policy rate to 2.0% by the end of 2027, although the Japanese Yen remained subdued against the US Dollar despite this outlook.