Dollar Heads Weekly Loss on Fed Rate Cut Expectations, Economic Slowdown

The US dollar has weakened over the past week amid disappointing economic data suggesting a slowing economy, including weaker job growth, a faltering housing market, and declining services sector performance. Investors are increasingly pricing in the likelihood of multiple Federal Reserve interest rate cuts this year, with a 91% chance of a cut expected at the September meeting. President Donald Trump has nominated Stephen Miran, Chair of the Council of Economic Advisers, to fill a recent vacancy on the Federal Reserve Board, signaling a more dovish stance aligned with expectations for lower rates. Additionally, Fed Governor Christopher Waller, who supported a recent rate cut, is seen as a top candidate to replace Jerome Powell as Fed Chair, further fueling speculation of more aggressive easing. The Trump administration's influence over economic policy has raised concerns about the Fed's independence, especially following the firing of a top Labor Department official after weak employment data. Meanwhile, new tariffs implemented by Trump have added to economic uncertainty, potentially weighing further on the dollar.