Dollar gains on report Waller favored to head Fed
Trump has criticised current Fed Chair Jerome Powell, whose term will end in May, as being too slow to cut interest rates and some investors are concerned that his replacement will not act independently of the Trump administration.
However, Waller is deeply respected in financial markets and central banking circles and his appointment would be positive for the US dollar, said Karl Schamotta, chief market strategist at Corpay in Toronto.
'He is understood to be someone with an easing bias, but he has the credibility that could keep long-term yields anchored and keep flows into the dollar well supported,' Schamotta said. Trump said on Tuesday he had narrowed his search for a new Fed chair to four people including economic adviser Kevin Hassett, former Fed governor and Trump supporter Kevin Warsh, and two other people. Trump did not name those people, but one is thought to be Waller.
Trump also said on Wednesday he would likely in the next two to three days nominate a candidate, out of a shortlist of three,
to fill a coming vacancy on the Fed's Board of Governors after Adriana Kugler last week unexpectedly announced she was leaving. They would serve Kugler's remaining months, leaving the choice of a permanent replacement for a later date.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.25% on the day at 98.43.
Sterling rose after more policymakers than expected at the Bank of England voted to keep rates on hold, even as the British central bank cut rates by 25 basis points as was widely expected. Four of the BoE's nine policymakers - worried about high inflation - sought to keep borrowing costs on hold, suggesting the BoE's run of rate cuts might be nearing an end.
The decision 'was a little bit more hawkish than the market expected,' said Sarah Ying, head of FX strategy, FICC Strategy at CIBC Capital Markets in Toronto. The British pound was last up 0.33% at $1.3401. The euro fell 0.36% to $1.1617. The euro was boosted earlier on Thursday, reaching a more than one-week high of $1.1698, as investors welcomed talks in search of a breakthrough to end the war in Ukraine. Russian President Vladimir Putin and US President Donald Trump will meet in the coming days, after Trump's envoy, Steve Witkoff, held talks with Putin.
Against the Swiss franc, the dollar strengthened 0.22% to 0.808, after President Karin Keller-Sutter returned from Washington empty-handed after a trip aimed at averting a 39% tariff on the country's exports to the US In cryptocurrencies, bitcoin gained 1.20% to $116,507.
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