USD steady to slightly firmer - Scotiabank

The US Dollar (USD) is trading steady to slightly firmer on the session but is heading for its first weekly drop since late November in DXY terms. Trading appears relatively slow ahead of the weekend as market participants eye Monday's inauguration and ponder what might follow, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD mixed versus majors

"Strongly bullish sentiment and positioning may leave the USD prone to profit-taking if the early hours/days of the new Trump administration do not deliver the sort of policy initiatives that the president-elect has promised. Global stocks are firmer while bonds are also tracking a little higher, with Gilts outperforming slightly after more soft UK data. Crude prices are firming modestly."

"US Treasury Secretary nominee Bessent sailed through his confirmation hearing yesterday, telling lawmakers that the Fed should maintain its monetary policy independence and arguing that tax cuts need to be extended to avert a sudden stop to the US economy."

"He also said that exchange rates will cushion the impact of tariffs on US consumers, suggesting he is OK with the USD appreciating in response to tariff action deployed by the incoming administration. Fed Governor Hammack said in a WSJ interview that the Fed can be "very patient" on further rate cuts."