US Dollar Index treads water above 98.00 ahead of Initial Jobless Claims

• The US Dollar Index holds ground after posting more than 0.5% losses on Wednesday.

• Trump considers White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and two other candidates for Fed Chairman.

• CME FedWatch tool indicates nearly a 95% possibility of a 25 basis point Fed rate cut in September.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is steadying after registering more than 0.5% losses in the previous session. The DXY is trading around 98.20 during the Asian hours on Thursday. The US weekly Initial Jobless Claims will likely be eyed later in the North American session.

Traders look for further developments surrounding the next US Federal Reserve (Fed) Chairman. US President Donald Trump announced on Tuesday that he will appoint the Fed’s Chair and Kugler’s replacement by the end of the week. Trump is considering White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and two other candidates for the Fed’s highest post. He confirmed that Treasury Secretary Scott Bessent is not his choice for the Fed’s Chair.

The US Dollar faced challenges as the weaker-than-expected US Nonfarm Payrolls (NFP) report for July pointed to a cooling labor market and boosted expectations that the US Federal Reserve (Fed) will deliver a 25 basis point rate cut in September. Markets have priced in nearly a 95% possibility of a 25 basis point (bps) cut at the September meeting, up from 48% a week ago, according to the CME FedWatch tool.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the Fed still has some ground to cover on its fight with inflation pressures despite overall progress. Daly highlighted that the Fed may be forced to act soon without having the full picture.

Moreover, Boston Fed President Susan Collins and Fed Board of Governors member Lisa Cook cautioned that persistent uncertainty remains a major obstacle to effective policy transmission and challenges the central bank’s ability to manage interest rates efficiently.