The dollar index, which measures the greenback against a basket of major currencies, fell sharply to a low of 96.83 on dovish Powell's testimony. In his testimony to Congress, Chairman Powell highlighted the global economic weakness, which increased downside risks to the US economy. He affirmed that the Federal Reserve would "act as appropriate" to sustain the longest US economic expansion in history, raising the chances of an interest rate cut in the coming meeting. The probability of an interest rate cut by 50 basis points in July rose to 28% as per the CME Fed Watch tool. The US 10-year yields dropped to a low of 2.036% after testing a high of 2.114% supported by strong employment figures. Market participants are looking forward to the second day of the testimony and the June CPI figures that could reduce the stretched-chances of an interest rate cut if came in stronger than expected. The USDJPY tumbled to a low of 107.86, the EURUSD rose to a high of $1.1282, and the GBPUSD climbed to a high of $1.2538.
Major US stock-index futures cheered the dovish tone of the Fed's chairman. Stocks were on the downside following the strong employment figures that were released on Friday, to show that investors are supporting an interest rate cut by the Fed. Following his testimony, the S&P500 futures rose to a record high of 3006, the Dow Jones Industrial Average futures rose to 26983, and Nasdaq futures rallied to a record high of 7961.
Precious metals prices soared as the dollar tumbled along with Treasury yields amid growing chances of an interest rate cut by the Fed later this month. The price of a gold ounce climbed to a one-week high of $1427, the silver ounce edged higher to $15.30, and palladium raced to a fifteen-week high of $1601.
Oil prices rallied to a multi-week high on a drop in US inventories. The US Energy Information Administration reported a decline of 9.499 million barrels in weekly crude oil inventories last week. On the other hand, the rising tension in the gulf between the United Kingdom and Iran following the British Tanker incident supported prices. The West Texas Intermediate crude oil futures rose to a high of $60.85, and the Brent futures advanced to a high of $67.50.