The dollar index (DXY00) on Monday fell to a 2-week low and finished down by -0.05%. The yen’s strength is weighing on the dollar on Monday after BOJ Governor Ueda signaled a possible interest rate hike at this month’s policy meeting. Also, Monday’s weaker-than-expected Nov US ISM manufacturing index is bearish for the dollar. In addition, the dollar is under pressure amid expectations for a Fed rate cut at next week’s FOMC meeting, as the swaps market now discounts a 96% chance of a rate cut at the Dec 9-10 FOMC meeting. The dollar recovered from its worst level after the 10-year T-note yield rose to a 1-week high, which strengthened the dollar’s interest rate differentials.
The dollar is also weighed down by negative carryover from last Tuesday, when Bloomberg reported that Kevin Hassett is at the top of the list of potential candidates to succeed Jerome Powell as US Fed Chair. Hassett’s nomination would be bearish for the dollar as he is seen as the most dovish candidate. In addition, Fed independence would come into question, as Hassett supports President Trump’s approach to cutting interest rates at the Fed, which Trump has long sought to control.
