Economy

Dollar rally stalls as market ponders Trump's Fed choice

Dollar rally stalls as market ponders Trump's Fed choice”

U.S. President Donald Trump said on September 29 that he has held four meetings to discuss the role of Federal Reserve chair and that he would make a decision in two or three weeks.

Warsh would appeal to President Trump for a number of reasons, including that the former Fed governor and Wall Street banker would favor less regulation of the financial sector.

He also is expected to be slightly more aggressive about interest rate hikes than Fed Chair Janet Yellen and could encourage a more rapid unwinding of the massive Fed balance sheet, which it has only begun to whittle back.

The U.S. dollar pared losses against its Canadian counterpart on Wednesday, helped by the release of strong U.S. employment data, although speculation over Federal Reserve Chair Janet Yellen's replacement limited the greenback's gains.

"The next head of the Fed is a longer-term focus for the forex markets", said Keiko Ninomiya, senior FX market analyst at SMBC Trust Bank in Tokyo.

On the data front, the U.S. Services Purchasing Managers' index (PMI) is due out at 9:45 a.m. ET, followed by the ISM's non-manufacturing report on business, set to come out at 10 a.m. ET.

The dollar index, which tracks the greenback against a basket of six major rivals, slipped 0.2 percent to 93.433, off a six-week high of 93.92 touched on Tuesday following strong USA manufacturing figures.

Interest rate futures traders are now pricing in an 83 percent likelihood of a December rate increase, up from 78 percent on Tuesday, according to the CME Group's FedWatch Tool.

The loonie was steady against the euro, with at 1.4672.

The common currency has been also dogged by concerns over political and social turmoil in Catalonia.



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