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Dollar Higher Amid Speculation over Fed Leadership

Dollar higher amid speculation over Fed leadership

Investing.com - The dollar moved higher against a basket of the other major currencies on Tuesday as speculation continued over who will be the next head of the Federal Reserve.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% at 93.31 by 03:50 AM ET (07:50 AM GMT).

The dollar found some support following report Monday that U.S. President Donald Trump is considering Stanford economist John Taylor, seen as more hawkish than current Chair Janet Yellen, to head the Fed.

But it was also reported that Trump is planning to meet with Yellen on Thursday as part of his search for a candidate to lead the central bank.

Other candidates rumored to be on Trump’s shortlist are Jerome Powell, a Fed governor; Kevin Warsh, a former Fed governor; Trump's top economic adviser Gary Cohn and Yellen, whose term is due to expire in early February.

The dollar was little changed against the yen, with USD/JPY at 112.17.

The euro was lower against the firmer dollar, with EUR/USD down 0.25% to 1.1765.

The euro remained on the defensive amid concerns over political uncertainty in the euro area, but losses were held in check amid expectations that the European Central Bank will outline plans later this month to start tapering its stimulus program.

Sterling was almost unchanged, with GBP/USD at 1.3261 ahead of a UK inflation report that was expected to show that consumer prices jumped again in September, adding to a squeeze on consumer spending and adding to pressure on the Bank of England to raise interest rates next month.

Investors were also awaiting comments by BoE Governor Mark Carney later in the day.

The pound fell almost 0.3% against the dollar on Monday amid fears that Brexit negotiations could be breaking down.

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