US Dollar Climbs As All Eyes On Powell’s Successor

The US Dollar has been trending upward since the start of trading this week, bolstered by rising US Treasury yields.This recovery follows a downward close last week, driven by several factors including recent economic data, statements from President Donald Trump, and reports concerning the potential successor to Federal Reserve Chair Jerome Powell.

Key Factors Influencing the MarketInterest Rate Expectations: Last week’s factors collectively supported expectations for a Federal Reserve rate cut. If realized in next week’s December meeting, a cut typically weakens the US Dollar and its assets, as lower interest rates reduce future yields.The Race for Fed Chair: Reports from Bloomberg last week indicated that Kevin Hassett is a leading candidate to succeed Jerome Powell. Hassett is perceived as more “dovish” (favoring monetary easing), which is generally negative for the Dollar. Furthermore, his potential appointment raises questions about Fed independence due to his alignment with President Trump’s preference for lower rates.Timeline for Nomination: President Trump announced last Tuesday that he would reveal his choice for the new Fed Chair in early 2026.

Economic Indicators: A Mixed Bag

Economic data released recently has shown signs of a manufacturing slowdown coupled with persistent inflation.

Labor Market Softening

The US labor market showed further signs of decline in November. The private sector lost approximately 32,000 jobs, reflecting a consistent slowdown in hiring during the second half of the year. This trend stems from economic caution and ongoing inflationary fluctuations.