Warsh-led Boost Limits Dollar's Weekly Losses

(RTTNews) - The U.S. Dollar declined during the week ended January 30 despite the boost provided by the appointment of Kevin Warsh as the next Fed Chairman. The dollar had declined heavily at the onset of the week amidst comments from President Trump that brushed off the dollar's decline.

During the past week, the U.S. dollar inter alia declined against the euro, the British pound, the Australian dollar, the Japanese yen, the Canadian dollar, the Swedish krona as well as the Swiss franc. As a result, the Dollar Index which measures the Dollar's strength against a basket of 6 currencies also dropped a little more than half a percentage.

Data released by the U.S. Census Bureau on Monday showed new orders for U.S.-manufactured durable goods jumping 5.3 percent month over month in November, rebounding from a revised 2.1 percent decline in October and surpassing market expectations of an increase of 3.7 percent.

The Federal Reserve, in its first meeting of 2026 held interest rates steady at 3.50 percent to 3.75 percent as widely expected. The Federal Open Markets Committee in its statement on Wednesday acknowledged that economic activity has been expanding at a solid pace. Nevertheless, it noted that uncertainty about the economic outlook remains elevated. The committee also noted that job gains have remained low, and the unemployment rate has shown some signs of stabilization. It however reiterated that inflation remains somewhat elevated.

Data released on Friday by the U.S. Bureau of Labor Statistics showed producer prices rising 3.0 percent year-on-year in December. Though unchanged from the previous month, the reading far exceeded market expectations of 2.7 percent.

The dollar rebounded on Friday, reacting to the appointment of Kevin Warsh to the top role at the Federal Reserve. Though the sticky producer price inflation also supported the dollar, Friday's rebound did not suffice, and the Dollar Index closed in the red on a weekly basis. The index which had touched a high of 97.33 on Monday dropped to the week's low of 95.55 on Tuesday. Friday's rebound helped the index close the week at 96.99 versus 97.60 a week earlier, resulting in weekly loss of 0.62 percent.

Amidst the dollar's weakness as well as anxiety ahead of the looming interest rate review by the European Central Bank, the EUR/USD pair added 0.19 percent during the week ended January 30. From the weekly low of 1.1833 touched on Monday, the pair climbed to a high of 1.12079 on Tuesday. The pair eventually closed the week at 1.1850, versus 1.1828 a week earlier. Data released during the week showed a better-than-expected GDP update and a lower-than-expected unemployment level resulting in markets overwhelmingly expecting a hold by the European Central Bank.

The British pound also rallied against the greenback during the week ended January 30 amidst the dollar's weakness. The GBP/USD pair which had closed at 1.3645 on January 23 gained 0.32 percent during the week ended January 30 to close at 1.3689. The weekly trading range was wider, between a low of 1.3636 recorded on Monday and a high of 1.3869 recorded on Tuesday. Bank of England, in its interest rate review scheduled for Thursday is widely expected to keep interest rates steady.

The Australian Dollar jumped 0.96 percent against the U.S. Dollar during the past week, amidst the dollar's plunge against major currencies and expectations of a rate hike from the Reserve Bank of Australia. A larger- than-expected level of inflation boosted the chances of a rate hike by the Reserve Bank of Australia, strengthening the Aussie. The AUD/USD pair surged from the level of 0.6896 recorded on January 23 to close the week ended January 30 at 0.6962. During the week, the pair oscillated between a low of 0.6897 recorded on Monday and the high of 0.7096 recorded on Thursday.

The U.S. Dollar declined against the Japanese Yen also during the week ended January 30 as markets speculated over government intervention to support the Japanese currency. The USD/JPY pair closed the week at 154.77 versus 155.72 a week earlier, registering a decline of 0.61 percent. The pair recorded the week's high of 155.35 on Monday and the week's low of 152.09 on Tuesday.

Amidst Warsh-inspired gains, the Dollar Index has firmed up at the start of the new week that would see key macro-economic data releases including the monthly payrolls data. The 6-currency index is currently at 97.35 versus 96.99 on Friday.

Ahead of the European Central Bank's widely expected pause on rates, the EUR/USD pair is currently at 1.1832 versus 1.1850 on Friday. The GBP/USD pair is currently trading near 1.3666 versus 1.3689 on Friday. Amidst bets of rate hike by the Reserve Bank of Australia, the AUD/USD pair is currently at 0.6945. The pair had closed at 0.6962 at close on Friday.

The USD/JPY pair is now at 155.21 as compared with the level of 154.77 recorded at the end of the previous week as markets digested comments from Prime Minister Sanae Takaichi apparently downplaying the potential for currency market intervention by Tokyo.