Dollar Holds Gains on Warsh Nomination

The dollar index fell to around 96.5 on Wednesday, extending recent losses as investors positioned ahead of the delayed January jobs report. The economy is expected to have added 70K jobs last month, following a 50K gain in December, while the unemployment rate is seen holding steady at 4.4%. A weaker-than-expected print could further weigh on risk sentiment, especially after retail sales data released Tuesday unexpectedly stalled, pointing to mounting pressure on lower- and middle-income consumers. The dollar also faced headwinds from concerns over foreign demand for US assets following reports that Chinese regulators advised financial institutions to limit holdings of US Treasuries. The move reinforced the view that investors may be rotating away from dollar-denominated assets toward safe havens and emerging markets. Meanwhile, Commerce Secretary Howard Lutnick said Tuesday that the dollar is being artificially pushed higher by other countries seeking to boost exports to the US.

The dollar index fell to 96.8 on Tuesday after falling more than 1% over the previous two sessions, as softer US data strengthened expectations for Federal Reserve rate cuts. A weaker-than-expected retail sales report showed consumer spending stalled in December, reinforcing the view that growth is slowing and supporting the case for policy easing. Money markets are now pricing a higher probability of three Fed rate cuts in 2026, compared with expectations for two cuts a week ago. Investors are turning to upcoming US jobs and inflation data for further signals on the economic outlook and policy path. The dollar also faced pressure from concerns about foreign demand for US assets after reports that Chinese regulators advised financial institutions to limit holdings of US Treasuries to reduce concentration risks and shield against uncertainty around US economic policies.

The dollar index held below 97 on Tuesday after losing more than 1% over the past two sessions, weighed down by concerns that foreign demand for dollar-denominated assets could soften. The decline followed reports that Chinese regulators advised financial institutions to limit their holdings of US Treasuries to reduce concentration risks and mitigate the impact of uncertain US economic policies. Meanwhile, investors turn their attention to the delayed US jobs and inflation reports this week, which could influence the Federal Reserve’s policy outlook. White House economic adviser Kevin Hassett noted on Monday that US job gains may slow in coming months due to weaker labor force growth and higher productivity. The Fed is widely expected to keep interest rates steady in March, with two rate cuts priced in later this year. The dollar nursed losses across the board, with the yen standing out on fears of possible intervention from Japanese authorities following the election.