The dollar experienced an increase on Friday, mitigating its weekly decline, following comments from U.S. President Donald Trump regarding an imminent announcement of his nominee for the Federal Reserve chairmanship, coupled with optimism that Washington will prevent a government shutdown. Trump announced his plan to reveal his choice for the successor to Fed Chair Jerome Powell on Friday, after reports surfaced regarding former Fed Governor Kevin Warsh’s visit to the White House. In Japan, recent data indicated that inflation has decelerated in Tokyo, aligning with the central bank’s target. The dollar regained some ground after experiencing losses earlier this week, as rising tensions involving Trump and countries such as Cuba, Iran, Venezuela, Greenland, and Europe led to a decline in investor confidence in U.S. assets. The potential appointment of Warsh, if confirmed, is perceived as a choice that could maintain a degree of independence, rather than aligning closely with Trump’s preferences,” stated Khoon Goh. “Any prudent market participant would avoid holding a substantial position over the weekend,” he added. “Some of this could simply be positioning, lightening up. If you’re short dollars, you’ve done well; take your chips off the table.”
The dollar index, which assesses the greenback relative to a selection of currencies, increased by 0.4% to 96.60, reducing its weekly drop to 0.9%. The dollar appreciated by 0.7% against the Swiss franc, reaching a value of 0.7699.
The euro declined 0.4% to $1.1916, while the yen depreciated 0.42% to 153.77 per dollar. Sterling experienced a decline of 0.32%, settling at $1.3759. Warsh visited the White House for a meeting with Trump on Thursday, as reported by a source familiar with the situation. A source indicated that Warsh made a positive impression on Trump, who is currently evaluating candidates to succeed Powell when his term concludes in May. Meanwhile, the White House announced that Trump signed an executive order imposing tariffs on nations supplying oil to Cuba. Reports indicating that Trump is contemplating strikes against Iran have led to a notable increase in oil prices and exerted pressure on the dollar earlier.
The U.S. domestic front received a positive signal as Trump backed a spending agreement reached by Senate Republicans and Democrats, which aims to prevent a government shutdown. The dollar reached a four-year low earlier in the week as Trump appeared to dismiss the currency’s weakness. It saw a slight recovery following Treasury Secretary Scott Bessent’s statement that Washington maintains a strong-dollar policy. The dollar concluded the previous week with its most significant decline since last April, influenced in part by worries regarding U.S. policy concerning Greenland. The dollar gained some support following the Fed’s decision to maintain interest rates on Wednesday, amidst what Powell characterized as a robust economy with reduced risks to inflation and employment.
The recent decline of the dollar has offered some relief for the struggling yen. The Japanese currency has remained within the 152 to 154 per dollar range for the majority of this week, influenced by discussions regarding rate checks from both the U.S. and Japan last week—an action frequently viewed as a potential precursor to intervention.
In January, core consumer prices in Tokyo increased by 2% compared to the same month last year, according to data released on Friday. This marks a deceleration from the prior month, yet aligns with the central bank’s target.
The Australian dollar declined by 0.7% against the US dollar, settling at $0.6996. New Zealand’s kiwi declined by 0.5%, settling at $0.6045. Cryptocurrencies experienced a significant decline, as bitcoin fell by 3.3% to $81,619.01, while ether dropped by 3.4% to $2,719.87.