Trump’s Fed Chair Decision Looms Over Dollar’s Trajectory Amid Global Monetary Shifts
The Bloomberg Dollar Spot Index's 8.1% plunge this year marks its steepest annual decline since 2015, with President Trump's trade policies and Fed pressure exacerbating the currency's weakness. Nomura's Yusuke Miyairi notes the Fed chair succession after Jerome Powell will dominate Q1 currency dynamics, as markets price in two 2024 rate cuts—diverging from hawkish expectations in Europe and commodity-driven economies.
Military spending and contained inflation buoy the euro against the dollar, while Canada, Sweden, and Australia face potential rate hikes. CFTC data reveals fleeting bullish dollar bets in mid-December, underscoring the fragility of sentiment ahead of pivotal Fed leadership changes.