Silver prices rose in European trade away from two-week lows and after marking the biggest loss in five weeks, with the white metal on track for the second weekly loss in a row as dollar strengthens. 

Dollar rallied to a three-week high following strong US data, which bolstered the case for yet another Fed rate hike in September.

Silver Today

Silver prices rose 0.6% to $24.28 an ounce, with a session-low at $24.11, after closing down 3.1% on Thursday, the worst loss in a month, marking a two-week trough at $24.05. 

Silver is currently down 1.4% so far this week, on track for the second weekly loss in a row. 

The Dollar

The dollar index rose 0.35% on Friday, extending gains for the second straight session and hitting a three-week high at 102.04 against a basket of major rivals. 

Dollar was boosted once more amid increasing prospects of a 0.25% Fed rate hike in September to reach the target of 5.75%, the highest in 2022 years.

Strong Data

US GDP growth clocked in at 2.4% in the second quarter, beating estimates of 1.8%, while unemployment claims fell for the third straight session.

The data showcases the economy's resilience despite recent aggressive monetary tightening measures by the Fed to control inflation.

The Fed

The Federal Reserve opened the door for interest rate hikes in the future, which will be decided according to upcoming data.

The Fed raised interest rates by 25 basis points this week to 5.5%, the highest in 22 years amid efforts to bring down inflation.

Euro declined in European trade against a basket of major rivals, sharpening losses for the second straight session and hitting a three-week trough, while on track for the second weekly loss in a row.

Euro is hurting following ECB President Lagarde's remarks, which reinforced bets the ECB will pause interest rate hikes at the September meeting. 

However, recent strong US data bolstered the case for yet another interest rate hike by the Fed at the September meeting.

EUR/USD fell 0.25% to 1.0948, the lowest since July 10, with a session-high at 1.0988.

Euro lost 1% on Thursday against dollar, the sixth loss in seven days, and the largest since March 15.

Such a heavy loss came following Christine Lagarde's somewhat bearish remarks.

Weekly Trading

Euro is down 1.5% so far this week against dollar, on track for the second weekly loss in a row.

ECB

As expected, the ECB raised interest rates by 25 basis points to 4.25%, the highest since October 2008.

ECB said that inflation in the euro zone continues to fall but remains much higher than the 2% target.

Lagarde

ECB President Christine Lagarde said raising interest rates at the September meeting depends solely on data. 

Lagarde said the ECB is committed to bringing inflation down towards targets, with future policies remaining tight for a suitable duration until consumer prices decline enough.

Pause

Overall, Lagarde's remarks reinforced bets the ECB will pause interest rates hikes at the September meeting as recent inflation data showed a reduction in consumer prices.

The Dollar

The dollar index rose 0.2% on Friday on track for a second session, hitting a two-week high at 101.89 against a basket of major rivals. 

Dollar was boosted by recent strong US data, which could pave the way for another 0.25% rate hike in September.

US GDP growth clocked in at 2.4% in the second quarter, beating estimates of 1.8%, while unemployment claims fell for the third straight session.

The Federal Reserve opened the door for interest rate hikes in the future, which will be decided according to upcoming data. 

Yen rose in European trade against a basket of major rivals, extending gains for the fifth straight session against dollar and hitting two-week high following Bank of Japan's meeting.

The BOJ held on to its current ultra easy monetary policies as expected, but added that control over government bond yields in the long term will be more flexible.

USD/JPY fell 1% to 138.06, the lowest since July 18, with a session-high at 141.07.

Yen closed Thursday up 0.6% against dollar, the fourth profit in a row amid speculation about the BOJ meeting. 

BOJ

At the third meeting helmed by new BOJ Governor Kazuo Ueda, the bank maintained current policies unchanged as expected with interest rates still at negative 0.1%.

The bank also maintained current 10-year government yield targets at zero, and the upper range at 0.5%. 

However, the bank said that control over the yield curve will be more flexible up and down, and the range will serve as a general guiding point.

BOJ said it's appropriate to leave interest rates unchanged to support economic growth while continuing to purchase government bonds on a wide range.

Important Step

The new modification to the yields control regime is an important step to steel the economy against risks, and could lead to normalized policies. 

While China is crushing the competition with its spending on green energy, the country is also single-handedly keeping the global coal industry afloat due to its continuous reliance on coal for its industries. 

Last year, China alone was responsible for half the world's spending on renewable energy, valued at $546 billion, nearly four times what the US spent on this year, with the EU in second place at $180 billion, with China expected to install 154 gigawatts worth of solar panels in 2023, nearly half the current global amount. 

It's clear that China is greatly benefiting from its dominant place in the renewable energy race, with Chinese solar panels becoming wildly popular worldwide, led by political and energy safety consideration more than anything else. 

However, China is by no means a king of green environment, as it remains a champion of coal usage, the dirtiest of fuels, with nearly all the world's new coal stations built in China last year, with the country continuing to build more every year.

While China is the world's second largest economy behind the US, it is however the world's top polluter, and if the world is to achieve its climate pledges and reduce carbon emissions, China will have to get rid of its coal industries, which is a tall task.  

Coal remains vital to China's energy safety net even as other forms of energies failed, and this year alone, the massive hydroelectric energy industry in China failed due to drought, with coal stepping in to fill the void. It's considered a symbol of reliability and safety in the cultural conscience, and some analysts note that relinquishing coal in China could raise political and economic instability in the country.