DXY Reclaims Six-Week High, Powell Succession Rumors Fueling Markets
The US dollar strengthened slightly on Friday (January 16th) after President Donald Trump's remarks praising Kevin Hassett and hinting he wanted to retain him in his current position fueled speculation that Hassett's chances of becoming the next Federal Reserve Chair were diminishing.
The market interpreted this signal as a shift in the Fed's succession path—and the initial response was to buy dollars.
The dollar index (DXY) rose to 99.41, after touching 99.49—a six-week high the day before. At the same time, the EUR/USD pair weakened to 1.1594. The Polymarket betting exchange also shifted expectations, with Kevin Warsh now considered the favorite candidate.
The dollar's strength this week was also supported by a series of US data confirming the labor market remains solid, prompting markets to postpone expectations of the next interest rate cut until June. In central bank comments, Fed officials emphasized caution: if the labor market is fragile and could weaken rapidly, the option of a rate cut remains on the table—but there's no rush.
In Asia, the yen strengthened to 158.16 per dollar following the Japanese government's warning of potential measures to address the yen's weakness. However, market participants remain vigilant about intervention if USD/JPY approaches the 160-162 area, amid speculation that Japan's fiscal policy could be more expansive.
Meanwhile, the crypto market also weakened: Bitcoin fell to around $94,812, as the dollar strengthened and investors remained in a "wait and see" mode regarding the direction of US interest rate policy.
Source: Newsmaker.id
