Dollar Weakens Again, "Warsh" Effect Begins to Ease
The US dollar weakened again on Tuesday (February 3rd) after recovering in recent days, a rally previously fueled by President Donald Trump's nomination of Kevin Warsh as Federal Reserve Chair. Market expectations that a "hawk" figure would lead the Fed briefly boosted the dollar, but the effect has begun to subside.
According to Commerzbank's Michael Pfister, the nomination did disrupt previously negative sentiment toward the dollar. However, he believes the "fundamental foundations" weighing on the dollar haven't actually changed, making yesterday's strengthening more likely a short-term reaction than a major trend reversal.
Pfister added that the dollar remains weaker year-to-date compared to the average G10 currency. At the same time, US policy uncertainty remains high, making the market sensitive to headlines.
Additional pressure comes from economic data: the Bureau of Labor Statistics announced it would delay the release of Friday's Nonfarm Payrolls report due to the partial US government shutdown. The loss of this significant data makes the dollar's direction more uncertain and prone to fluctuations.
For context, the dollar index (DXY) fell about 0.2% to 97.419, indicating the dollar has lost momentum again after a brief rally following news of Warsh's nomination.
Source: Newsmaker.id
