Market Drivers – US Session: Dollar Bounces Back as Markets Navigate Global Tensions and Policy Debates

The U.S. dollar caught a breather on Thursday, finding some relief despite fluctuating risk sentiment in global markets. Investors turned their focus to renewed tensions between political leadership and the Federal Reserve, with calls for lower interest rates and criticism of the Fed’s current stewardship stirring the financial landscape. These remarks followed a recent defense of the central bank’s independence, highlighting ongoing debates over monetary policy direction.

The US Dollar Index (DXY) recorded solid gains but remained near the lower end of its recent range, hovering close to three-year lows. With global markets set for a quieter session due to the Good Friday holiday, attention shifts to upcoming remarks from a Federal Reserve official, which could provide further clues on the bank’s outlook amid these pressures.

In currency markets, the euro faced noticeable losses against the dollar, briefly crossing the 1.1400 threshold before retreating. Investors are now awaiting the European Commission’s preliminary Consumer Confidence data, due early next week, for insights into the region’s economic sentiment. Meanwhile, the British pound continued its steady climb, though its upward momentum was restrained near the 1.3270 level. The UK’s Public Sector Net Borrowing figures, scheduled for release on April 22, will be the next key data point for sterling traders.

The Japanese yen saw a modest recovery after dipping to 141.60, pushing past the 142.00 mark by the end of the day. Japan’s upcoming inflation rate report will be the sole focus for yen traders in an otherwise sparse data calendar. Down under, the Australian dollar posted slight gains, settling in the 0.6380-0.6390 range and marking its seventh consecutive day of advances. Australia’s flash S&P Global Manufacturing and Services PMIs, due on April 23, will offer a fresh gauge of economic activity.

On the commodities front, renewed concerns over supply disruptions and fresh sanctions on Iranian oil exports drove West Texas Intermediate (WTI) crude prices above $64.00 per barrel, hitting a two-week high. Precious metals, however, faced renewed selling pressure. Gold prices slipped below $3,300 per troy ounce, weighed down by a firmer risk-on tone in broader markets, while silver prices dipped to three-day lows near $32.00 per ounce.

As markets head into a holiday-shortened week, investors remain vigilant, balancing policy rhetoric, currency movements, and commodity shifts in a complex global environment.