Investors are holding their breath as they await the announcement regarding who the next chief of the Federal Reserve will be, something that Donald Trump has to decide on any moment now. This has caused the dollar (which was making slow but steady gains on major currencies last week) to suspend its upwards movement while we wait.
In general, investors lately seem to favor a bullish scenario for the dollar. Economic data from the United States has been positive over the past few months, despite political unrest. The Federal Reserve seems determined to enact another increase in interest rates in December, which would solidify the dollar further. Still, right now our biggest clue as to where the USD will go has to do with the next head of the Fed - Janet Yellen’s mandate expires in a few months and who will replace her will dictate what kind of policies we can expect from the Fed in the future.
The public expects that the next head will be John Taylor, an economist from Stanford who is believed to take a more hawkish view on monetary policy - which would make the dollar stronger. However, if there are any surprises the markets may waver.
