The U.S. dollar moved within a narrow range amid heightened market anticipation, as attention turns to President Donald Trump’s upcoming decision on who will fill the vacant seat on the Federal Reserve’s Board of Governors. This comes as the Dollar Index which measures the greenback against a basket of six major currencies slipped by 0.1% in quiet trading, following its sharpest daily drop in nearly four months after a disappointing jobs report.
The dollar continues to feel the weight of that report, with recent data showing that U.S. services sector activity unexpectedly flatlined in July, even as input costs surged at the fastest pace in almost three years a sign of the lingering impact of Trump’s tariffs on the economy. With no significant economic data scheduled, investor focus has shifted to Trump’s pick to replace outgoing Fed board member Adriana Kugler, with the president stating he will announce his choice by the end of the week.
Market expectations now strongly favor a Federal Reserve rate cut in September, with traders pricing in nearly a 90% chance, along with around 56 basis points of total easing anticipated before year end. Analysts note that Trump’s recent attacks on the Bureau of Labor Statistics over jobs data revisions have had limited market reaction thus far, but warn that appointing a candidate who echoes that rhetoric may fuel concerns over a disconnect between Fed policy and official economic data potentially adding further pressure on the dollar.
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