US dollar surges as markets reprice after Fed signaling and stronger factory data

The US dollar staged a swift rebound against major currencies over two trading sessions as market participants reassessed the likely path of US monetary policy. A high‑profile Fed nomination that traders read as leaning toward a tighter stance collated with stronger‑than‑expected US manufacturing prints to flip pricing in short‑dated rates and prompt concentrated dollar‑short positions to be unwound. That initial repricing was then magnified by month‑end flows, technical stops and thin seasonal liquidity, producing outsized intraday moves and elevated FX volatility. Real‑rate repricing pushed Treasury yields higher, reducing the relative attraction of non‑yielding assets and pressuring gold and silver; gold fell into the high single digits intraday at its worst, while silver suffered a larger, mid‑teen single‑session drop. Exchange and clearing changes amplified the market reaction — CME Group raised margin requirements on COMEX gold and silver futures, forcing some participants to post more collateral or trim positions into thin books. Reports showed substantial managed‑money reductions in COMEX gold futures (roughly 17,741 lots reported) and multi‑session slides in silver ETF holdings, highlighting how crowded momentum trades were exposed. The liquidation rippled beyond metals: crypto spot products and leveraged ETF structures recorded notable outflows and liquidations, and traders rotated into cash, short‑duration paper and fixed income, further pressuring risk assets. Options markets that had priced protection against more dollar weakness saw demand ease and some normalization in skew as extreme hedges were unwound. The episode played against an earlier political narrative that had signaled a preference for a softer dollar, creating a momentary conflict of signals that increased cross‑desk uncertainty. Additional headlines — including a reported Justice Department inquiry related to Fed‑adjacent conduct, disruptive winter weather and a mixed earnings backdrop — heightened risk aversion and widened bid‑ask spreads in sensitive contracts. Emerging‑market currencies and commodity exporters felt the spillover as capital flows tightened and hedging demand spiked. For portfolio managers the episode underscored the speed with which personnel moves and mechanical market rules can act as de‑facto policy signals and force rapid rebalancing across rates, FX and commodities. Near term, incoming macro releases, sequencing of Fed communication and technical/option positioning are likely to keep the dollar choppy; many strategists still view the move as a tactical repricing rather than a durable regime shift unless supported by persistent changes in real yields and policy guidance.