The dollar index (DXY00) on Thursday rose by +0.05%. The dollar recovered from early losses on Thursday and posted modest gains as EUR/USD retreated. The dollar also found some support on Thursday after US weekly jobless claims fell as expected. The dollar initially moved lower on Thursday amid weaker-than-expected US reports on the Nov CPI and the Dec Philadelphia Fed business outlook survey, which may prompt the Fed to keep easing monetary policy. Also, strength in stocks on Thursday curbed liquidity demand for the dollar.
The dollar is also under pressure as the Fed boosts liquidity in the financial system, having begun purchasing $40 billion a month in T-bills, effective last Friday. Finally, the dollar is also being undercut by concerns that President Trump intends to appoint a dovish Fed Chair, which would be bearish for the dollar. Mr. Trump recently said that he will announce his selection for the new Fed Chair in early 2026. Bloomberg reported that National Economic Council Director Kevin Hassett is the most likely choice as the next Fed Chair, seen by markets as the most dovish candidate.
