The US Dollar fell from the recently struck 7-week peak as speculation grows that the President’s choice to replace Janet Yellen as the Federal Reserve president could be one with a decidedly dovish leaning. One media report said that Steve Mnuchin, the US Treasury Secretary, seems to favor Jerome Powell, a current Federal Reserve Branch governor, over Keven Warsh, a former Fed governor. Both individuals were seen at the White House a week ago to interview with Trump and Mnuchin. Janet Yellen is set to leave her job in February 2018, and could be replaced by Powell, a critic of the Fed’s QA program.
As reported at 11:19 am (BST) in London, the EUR/USD was trading at $1.18, a gain of 0.31% and a fresh session high; earlier, the pair hit a session trough of $1.17350. The GBP/USD is up 0.30% and trading at $1.3277, off the session peak of $1.3286 while the low stands at $1.3233. The USD/JPY is down 0.36% and trading at 112.47 Yen, off the session low of 112.40 Yen.
Dollar Outlook Flips on Speculation
Analysts say that markets had recently been banking on Keven Warsh as the heir apparent to Yellen. Warsh was viewed as Dollar positive while Powell a decided negative for the greenback, and one who will only very gradually implement gradual policy changes. The more hawkish candidate had investors hoping for a quicker normalization of the Fed’s loose monetary policy, which would have boosted the greenback.
