The dollar index (DXY00) on Friday rose by +0.02%. The dollar recovered from early losses on Friday and finished little changed. Friday's rally in stocks reduced liquidity demand for the dollar. The dollar was also under pressure amid expectations that the Fed will cut interest rates at next week's FOMC meeting. The dollar recovered its losses after the University of Michigan's US Dec consumer sentiment index increased more than expected. Also, higher T-note yields on Friday were bullish for the dollar.
President Trump said on Tuesday that he will announce his selection for the new Fed Chair in early 2026. Bloomberg reported last week that National Economic Council Director Kevin Hassett is seen as the likely choice to succeed Powell. Hassett's nomination would be bearish for the dollar as he is seen as the most dovish candidate. In addition, Fed independence would come into question, as Hassett supports President Trump's approach to cutting interest rates at the Fed.
