The US Dollar Index (DXY), a measure of the US Dollar (USD) against a basket of six major currencies, held steady near 97.25, its lowest level in three-and-a-half years during the Asian session on Wednesday (6/27).
US President Donald Trump is considering picking the next Federal Reserve (Fed) Chair early, fueling fresh bets on a US interest rate cut. Trump said he has a shortlist of potential Powell successors down to "three or four people," without naming the finalists. Concerns over the Fed's future independence could weaken the US Dollar (USD) against its rivals.
"For now, expectations that President Trump will pick a more dovish chair will continue to weigh on the FOMC and USD prices," said Carol Kong, currency strategist at Commonwealth Bank of Australia.
Meanwhile, financial markets have priced in a rate cut at the Fed's next meeting in July to 25%, up from just 12% a week ago, and are pricing in a 64 basis point (bps) cut by the end of the year, up from around 46 bps last week, according to Reuters.
US Gross Domestic Product (GDP) fell at an annualized rate of 0.5% in the first quarter (Q1) of 2025, the US Bureau of Economic Analysis (BEA) said on Thursday. This was worse than the previous estimate and market expectations of -0.2%. The dismal GDP data contributed to the greenback's decline.
Traders will be keeping an eye on the release of the US Personal Consumption Expenditure (PCE) Price Index data for May on Friday, the Fed's preferred measure of inflation. If the report shows a stronger-than-expected reading, it could help limit the USD's losses in the near term. (alg)
Source: FXstreet
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