USD softens as Trump signals Hassett for Fed Chair – Scotiabank
|The US Dollar (USD) twitched nervously yesterday as President Trump referred to CEA head Hassett as the 'potential' Fed chair. This morning sees the USD broadly lower and the US yield curve a little steeper as markets mull the strengthening prospect of a Hassett-led Fed, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
DXY pressured as yield advantage continues to shrink
"Spot moves are not all that significant on the face of it; the Scandies and the pound lead gains on the session, rising between 0.5-0.6% but the DXY is pinned back to recent lows and looks prone to more losses. The DXY’s weighted yield spread over its major currency peers has been steadily shrinking in recent months while the index itself has rallied since September. The narrowing yield advantage adds to building bearish pressure on the USD."
"Asian and European stocks are mixed while US equity futures are higher on the session. Risk sentiment has steadied since the late November volatility in tech stocks but underlying worries persist. Oracle Corp’s credit default swaps continue to widen, reaching a little beyond the previous peak seen in 2022 (implying a cumulative 5Y probability of default of a little over 10%)."
"On the charts, DXY losses have dumped the index back to the 99.0 support zone. This is the neckline trigger for a double top pattern that developed through November at 100.4. A break lower targets a drop to 97.6."
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.