NEW YORK: The US dollar rose against most currencies on Tuesday, but remained within striking distance of Friday’s lows, with the market still in consolidation mode.
The market is focused on President Donald Trump’s nominations to the Federal Reserve Board after the resignation of Fed Governor Adriana Kugler last Friday as well as his choice for commissioner of Bureau of Labor Statistics.
Trump on Tuesday said he would announce decisions soon on a short-term replacement for Kugler, including his pick for the next Fed chair. He ruled out US Treasury Secretary Scott Bessent as a contender to replace current chief Jerome Powell whose term ends in May 2026.
Bessent wanted to remain in his current job. The White House is looking at four candidates to replace Powell.
“These last two days we have been consolidating. And the data this week doesn’t really matter so much. With the Q2 GDP out, most of the data is old news,” said Marc Chandler, chief market strategist, at Bannockburn Forex.
“What we’re waiting for is the next day or two, people are expecting Trump to announce who’s going to replace the retiring Fed governor, and who’s going to be at the BLS.” Trump said on Sunday he would announce a new BLS commissioner within three or four days.
Analysts said Kugler’s exit and the firing of the BLS’s commissioner could harden views that the Federal Open Market Committee’s independence is protected, recalling that the new appointee will be just one vote on the FOMC.
Tuesday’s data, meanwhile, had little impact on the currency market.
US services sector activity unexpectedly showed a flat outcome in July, with little change in orders and a further weakening in employment even as input costs climbed by the most in nearly three years.
The Institute for Supply Management said on Tuesday its non-manufacturing purchasing managers index (PMI) slipped to 50.1 last month from 50.8 in June.
Economists polled by Reuters had forecast the services PMI would rise to 51.5. A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy.
RATE CUTS
The euro was last down 0.2% against the dollar at $1.1553. That pushed the dollar index, which measures the US currency against six counterparts with the euro as the biggest component, up 0.30% at 98.88, after touching a one-week low earlier in the session at 98.609.
Weak US jobs data last Friday had boosted bets on Federal Reserve rate cuts and triggered a sharp dollar selloff. US rate futures are now pricing in an 88% chance of the Fed cutting rates in its next meeting in September, compared with 35% a week earlier, according to the CME’s FedWatch.
They also indicate 60 basis points (bps) of cuts by end-December and 130 bps in rate declines by October 2026, 30 bps more than the levels seen on Friday before the US jobs data.
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