USD slides as Hassett emerges as Fed chair favorite – ING
|The US Dollar (USD) sold off in Asia as news emerged that interviews for the Fed chair position had been cancelled, ING's FX analyst Chris Turner notes.
Dollar weakness tracks dovish Fed expectations
"In theory, the likes of Christopher Waller were meant to be meeting Vice President Vance today. Instead, the news is being taken that President Trump has already made up his mind – he said as much on Air Force One last weekend. And the president's pick will likely be Kevin Hassett, who is currently Director of the National Economic Council and whose views are seen as most closely aligned with the president."
"Overnight price action has provided a mini-preview of what we can expect should it become even clearer that Hassett will succeed Powell. Given perceptions of Hassett as quite dovish, the dollar is a little weaker across the board, the yield curve has seen some modest bullish steepening and risk assets have turned gently bid. This could be the dominant theme until next week's FOMC meeting. Speaking to buy-side customers recently, some were looking to fade dollar weakness on the Hassett announcement effect, ultimately betting that he would not be as dovish or be allowed to be as dovish given the nature of the FOMC voting process."
"Away from the Hassett news, we have two pieces of US data today. Expectations are that the November ADP jobs release will soften to 10k from 42k prior. That should not move the needle on the 92% probability attached to a 25bp Fed cut next week. And we'll also get to see the ISM Services figure for November. The market could potentially react to the employment component figure, which last month was still in contractionary territory at 48. We still don't think the dollar has fully connected with the recent drop in short-dated US rates, and a break of 99.00 in DXY could trigger some bearish momentum."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.