The dollar index rose by +0.04% on Friday, recovering from early losses after President Trump expressed reluctance to nominate Kevin Hassett as Fed Chair. Hassett was viewed as dovish, so the nomination of a hawkish candidate like Kevin Warsh would be dollar supportive. Stronger-than-expected US Dec manufacturing production also supported the dollar.

US Jan NAHB housing market index unexpectedly fell -2 to 37, weaker than expected. The markets are pricing in a 5% chance of a -25 bp rate cut at the FOMC’s next meeting. FOMC expected to cut rates by -50 bp in 2026, while BOJ may raise rates by +25 bp.

EUR/USD fell on Friday due to dollar strength. ECB Chief Economist Philip Lane expressed comfort with current monetary policy settings. Swaps are pricing in a 0% chance of a +25 bp rate hike by the ECB at the next policy meeting. USD/JPY fell following comments from Japanese Finance Minister Satsuki Katayama.

Yen under pressure due to Japan’s internal politics and China-Japan tensions. Markets discounting 0% chance of BOJ rate hike. Gold and silver prices fell on Friday amid higher global bond yields and easing Iran tensions. Concerns about Fed’s independence boosting demand for precious metals. President Trump’s policies also impacting precious metal prices.

Read more at Yahoo Finance: Dollar Recovers on Fed Chair Speculation