The US dollar weakened in late Wednesday trading as falling frontend rates reflected market expectations of a dovish Federal Reserve appointment under the Trump administration, with NEC director Kevin Hasset suggesting Governor Cook may resign before the September meeting, potentially replaced by David Malpass.
The dollar’s decline aligns with a broader trend of lower rates, though its weakness against other currencies like the yen is uncertain due to tariff concerns impacting G10 and emerging markets.
Mexico’s peso gained from President Claudia Sheinbaum’s adept handling of US relations, outperforming Canada’s currency, while high beta currencies like the Australian and New Zealand dollar benefited from strong equity markets before Nvidia’s earnings.
In Europe, the euro faced pressure from France’s political uncertainty but later stabilized. While the UK’s fiscal challenges and proposed property tax hikes raised concerns about growth, US mortgage applications saw a slight recovery, and Fed Williams noted a restrictive policy stance and economic slowdown, reinforcing expectations of a dovish Fed shift. GDP and claims data are due on Thursday.
Exclusive FX research from LMAX Group Market Strategist, Joel Kruger
Trading involves risk and may not be suitable for all investors. The information provided in this article is for educational purposes only and does not constitute financial advice. Always conduct thorough research and seek professional advice before making any investment decisions.
