The US dollar rose slightly on Friday but was on track for a weekly decline after US President Donald Trump’s interim pick for a Federal Reserve Board member sparked expectations of a dovish successor to Jerome Powell when his term ends.
The yen slipped slightly against the dollar, which dropped 0.31% to 147.560 yen. The dollar rose 0.25% against the euro to $1.163775 and climbed 0.29% against the Swiss franc to 0.80840 francs.
Amid concerns over slowing US economic growth, especially in the labor market—fueling hopes for Fed rate cuts—the dollar has declined 0.6% so far this week against a basket of major currencies. On Friday, the US Dollar Index edged up 0.1% to 98.15.
Markets focused on Trump’s nomination of Council of Economic Advisers Chair Stephen Miran to fill a recent vacancy on the Federal Reserve Board as the White House continues its search for a permanent replacement. Miran will take over from Governor Adriana Kugler, who unexpectedly resigned last week.
Michael Brown, chief research strategist at Pepperstone, commented, “In many ways, this confirms what we already suspected: we’re looking at a Federal Reserve more politically influenced and less independent.” He added that this reinforces his long-term bearish outlook on the dollar, though he noted Miran has relatively low market credibility.
Brown added, “We all expect that at the September FOMC meeting—and any future meetings Miran attends—he will be highly dovish, advocating significant rate cuts, essentially following the president’s directive.”
While investors remain concerned about the Fed’s independence and credibility following Trump’s repeated criticism of Powell for not cutting rates, some analysts believe Miran’s appointment is unlikely to have a major impact.
Reeza Rashid, global markets strategist at JPMorgan Asset Management in Singapore, said, “We still believe the central bank’s independence will largely remain intact,” forecasting that the Fed would stay focused on incoming data and the overall health of the US economy.
Trump has fiercely criticized Powell, and expectations of a dovish successor have weighed on the dollar this week—even though Trump has recently pulled back from threats to fire Powell before his term ends on May 15.
Bloomberg reported on Thursday that Fed Governor Christopher Waller—who voted in favor of a rate cut at the last meeting—is emerging as one of the top contenders to replace Powell.
Investors now shift their attention to next week’s US consumer price inflation data, with Reuters survey respondents expecting core inflation to rise 0.3% month-over-month in July. These figures will offer clues on whether tariff-induced inflation pressures are emerging and help shape the Fed’s policy path.
Atlanta Fed President Raphael Bostic said Thursday that although labor market risks are rising, it’s still too early to commit to a rate cut, pointing out that more data will be available before the next policy meeting on September 16–17.
Traders are pricing in a 93% probability of a rate cut in September, with at least two cuts expected before year-end.
The dollar has broadly weakened this year, falling 9.5% against a basket of major currencies as investors seek alternatives amid concerns over Trump’s volatile trade policies. Analysts expect continued pressure on the dollar but don’t foresee a sharp collapse.
Rashid added, “We expect a scenario of bending, but not breaking, for the dollar.”
As for the British pound, it touched a new two-week high at $1.34515, maintaining strong gains from Thursday after the Bank of England cut interest rates. However, the 5–4 vote revealed weak consensus on the easing path.
Goldman Sachs analysts said the split vote “suggests one of the most hawkish 25-basis-point cuts that could reasonably be expected.” The pound appears headed for its best weekly performance since late June.
