TOKYO/LONDON – The dollar rose on Friday, recouping some of this week’s losses after U.S. President Donald Trump said he would soon announce his nominee for head of the Federal Reserve, with reports saying Kevin Warsh was the frontrunner.
The euro recently fell 0.3% to $1.1932, the pound fell 0.4% to $1.3765, and the dollar rose 0.5% against the yen to 153.88 yen.
As a result of the above, the dollar index rose 0.37% to 96.48 against the six same currencies.
President Trump said Friday that he plans to name candidates to replace Federal Reserve Chairman Jerome Powell.
Bloomberg News reported that Mr. Warsh would be offered a job as Mr. Powell’s successor at the Fed, but a person familiar with the matter told Reuters that he met with Mr. Trump at the White House on Thursday.
Derek Halpenny, head of global markets EMEA research at MUFG, said the dollar’s strength is “a natural reaction because it confirms that the next Fed chair will not be Kevin Hassett or Rick Rieder.”
“Both candidates were running and were considered favorites at various stages, but were perceived by the market as inexperienced, too close to President Trump, and therefore vulnerable.”
He said this was “certainly not the case with Kevin Warsh.”
The dollar also rose after Republican and Democratic lawmakers struck a deal to avert an impending government shutdown.
The combination helped stabilize the currency after escalating conflicts overseas and worries over immigration crackdowns at home hammered the U.S. currency this month.
The dollar index hit a four-year low earlier this week.
Positions thin out heading into the weekend.
Despite this, there is no sign that the flow of news is slowing down.
President Trump said on Thursday he planned to meet with leaders in Tehran, even as the United States sent new warships to the Middle East amid rising tensions in Iran and Pentagon Secretary Pete Hegseth said the military was ready to implement whatever the president decides.
The White House also announced that President Trump had signed an executive order imposing tariffs on countries that supply oil to Cuba, while threatening new tariffs on Canada and saying the United States was revoking the certification of business jets made in the country.
“Prudent market participants don’t want to carry large positions over the weekend,” said Koon Goh, head of Asia research at ANZ in Singapore. “So some of this could just be light positioning. If you’re short on dollars, you’ve done well. Take your chips off the table.”
The movement is not just on the dollar side of the equation.
Japan’s yen may have weakened on the day, but it is still poised for a second consecutive week of gains after Japanese policymakers signaled the possibility of coordinated currency market intervention with the United States to protect the currency.
Last week, the yen fell to its lowest level in about 18 months as concerns about Japan’s finances grew ahead of a snap election in which Prime Minister Sanae Takaichi and her opponents are campaigning on the promise of tax cuts.
The dollar also rose by the safe-haven Swiss franc, rising 0.5% to 0.768 francs.
The Swiss currency has benefited greatly from the recent economic and geopolitical uncertainty, trading near its highest since January 2015, when the SNB waived its exchange rate cap, and the franc appreciated by 30%.
The Australian dollar fell 0.6% against the US dollar to $0.7008.
Among cryptocurrencies, Bitcoin fell 2.2% to $82,100, hitting its lowest since November 21st, while Ether fell 3% to $2,732.04.
