Precise Investors Editorial Team
The dollar index was at 98.919, languishing near a five-week low
The dollar was weak on Thursday after lacklustre economic data strengthened the case for a rate cut from the U.S. central bank next week.
Investors have also been weighing the prospect of White House economic adviser Kevin Hassett taking over as central bank Chair after Jerome Powell’s term ends in May. He is expected to push for more rate cuts. U.S. President Donald Trump said this week he will unveil his pick to succeed Powell early next year, extending a months-long selection process despite previously claiming he had already decided on a candidate.
A move to appoint Hassett could pressure the dollar, analysts have said, with bond investors expressing concerns to the U.S. Treasury that Hassett could aggressively cut rates to align with Trump’s preferences, the Financial Times reported.
Traders are pricing in an 89% chance of a quarter-point rate cut next week, CME FedWatch showed, with an expected 89 basis points of easing by the end of next year. Analysts are sceptical about how long and deep the easing cycle would be.
Thomas Mathews, head of markets for the Asia-Pacific region at Capital Economics, said given the strength of the U.S. economy, investors may be overestimating how far the Fed will cut in the medium-term, regardless of what it does next week. That, I think, will keep the dollar from falling too far, he said.
Still, the dollar index was at 98.919, languishing near a five-week low. The index is down nearly 9% for the year.
Thierry Wizman, global FX & rates strategist at Macquarie, said the sudden realization of better data abroad, wage growth signals in Japan, combined with the prospect that the next central bank chair will be Hassett, has probably helped push other currencies higher as the dollar has slid.
Comments (0)
Average Rating: No ratings yet/5 (0 reviews)
No comments yet. Be the first to comment!