Dollar set for small weekly gains after Fed rate cut
The U.S. dollar was steady on Friday, set to end a volatile week with modest gains as traders digested the implications of a new Trump presidency and a docile Federal Reserve.
At 4:30 a.m. ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was flat at 104.372.
The index is on track for a gain of just 0.2% this week, even after rising 1.5% on Wednesday after Donald Trump’s election victory, when it posted its biggest one-day gain since September 2022.
The dollar jumped to a four-month high on Wednesday as traders braced for a new Trump administration, whose tariff and immigration policies are likely to prompt the Federal Reserve to cut interest rates at a slower and shallower pace.
However, some of those gains have been wiped out after the Federal Reserve cut interest rates by 25 basis points on Thursday, and signaled the possibility of further rate cuts as inflation looks set to ease back to the central bank’s 2% target.
“Most of the dollar’s pre-election move has been lost. To us, it looks more like a positioning adjustment than a rethink about what a Trump presidency means for global markets,” analysts at ING said in a note.
“Remember that markets went into Election Day largely pricing in a Trump win, and while the dollar surged in reaction to the Republican’s landslide victory, there may be some questions now about how much further the dollar can strengthen in the near term as the focus shifts back to macroeconomic discussions.”
Source: Investing.com
