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The dollar is poised for its sharpest annual retreat in eight years and investors say more declines are coming if the next Federal Reserve chief opts for deeper interest-rate cuts as expected.\u00a0<\/p>\n
The Bloomberg Dollar Spot Index has fallen about 8% this year so far. After tumbling in the wake of Donald Trump\u2019s \u201cLiberation Day\u201d tariffs in April, the greenback came under sustained pressure as the president kicked off his aggressive campaign to get a dovish appointee installed as Fed chair next year.<\/p>\n
\u201cThe biggest factor for the dollar in first quarter will be the Fed,\u201d said Yusuke Miyairi, a foreign-exchange strategist at Nomura. \u201cAnd it\u2019s not just the meetings in January and March, but who will be the Fed Chair after Jerome Powell ends his term.\u201d \u00a0<\/p>\n
With at least two rate reductions priced in for next year, the US\u2019s policy path diverges from some of its developed peers, further dimming the dollar\u2019s appeal.<\/p>\n
The euro has surged against the greenback as benign inflation and a coming wave of European defense spending keep rate-cut bets close to zero. In Canada, Sweden and Australia, meanwhile, rates traders are wagering on hikes.\u00a0<\/p>\n
The dollar gauge rose as much as 0.2% Wednesday after Labor Department data showed applications for US unemployment benefits fell last week to one of the\u00a0lowest\u00a0levels this year. The greenback index was still on track to finish December down about 1%.\u00a0<\/p>\n
This month, a brief period of bullish positioning on the dollar reverted to the more pessimistic stance that\u2019s dominated since the April tariffs fueled concerns about the US economy, Commodity Futures Trading Commission data for the week ending Dec. 16 show.<\/p>\n
For now, it\u2019s all about the Fed and who steps into replace Jerome Powell, whose term as chair is set to end in May.\u00a0<\/p>\n
Trump recently teased that he has a\u00a0preferred\u00a0candidate, but is in no hurry to make an announcement \u2014 while also musing that he might fire the central bank\u2019s current leader.<\/p>\n
National Economic Council Director Kevin Hassett has long been seen as the leading candidate, while Trump also expressed interest in former Fed governor Kevin Warsh. Fed governors Christopher Waller and Michelle Bowman and BlackRock\u2019s Rick Rieder are also seen as being in the running.\u00a0<\/p>\n
\u201cHassett would be more or less priced in since he has been the frontrunner for some time now, but Warsh or Waller would likely not be as quick to cut, which would be better for the dollar,\u201d said Andrew Hazlett, a foreign-exchange trader at Monex Inc.<\/p>\n<\/div>\n
#Dollar #set #worst #year #Fed #drama #center #stage<\/p>\n","protected":false},"excerpt":{"rendered":"
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