The US dollar rose slightly on Friday but was on track for a weekly decline after US President Donald Trump's interim pick for a Federal Reserve Board member sparked expectations of a dovish successor to Jerome Powell when his term ends.

The yen slipped slightly against the dollar, which dropped 0.31% to 147.560 yen. The dollar rose 0.25% against the euro to $1.163775 and climbed 0.29% against the Swiss franc to 0.80840 francs.

Amid concerns over slowing US economic growth, especially in the labor market—fueling hopes for Fed rate cuts—the dollar has declined 0.6% so far this week against a basket of major currencies. On Friday, the US Dollar Index edged up 0.1% to 98.15.

Markets focused on Trump’s nomination of Council of Economic Advisers Chair Stephen Miran to fill a recent vacancy on the Federal Reserve Board as the White House continues its search for a permanent replacement. Miran will take over from Governor Adriana Kugler, who unexpectedly resigned last week.

Michael Brown, chief research strategist at Pepperstone, commented, “In many ways, this confirms what we already suspected: we're looking at a Federal Reserve more politically influenced and less independent.” He added that this reinforces his long-term bearish outlook on the dollar, though he noted Miran has relatively low market credibility.

Brown added, “We all expect that at the September FOMC meeting—and any future meetings Miran attends—he will be highly dovish, advocating significant rate cuts, essentially following the president's directive.”

While investors remain concerned about the Fed’s independence and credibility following Trump’s repeated criticism of Powell for not cutting rates, some analysts believe Miran’s appointment is unlikely to have a major impact.

Reeza Rashid, global markets strategist at JPMorgan Asset Management in Singapore, said, “We still believe the central bank’s independence will largely remain intact,” forecasting that the Fed would stay focused on incoming data and the overall health of the US economy.

Trump has fiercely criticized Powell, and expectations of a dovish successor have weighed on the dollar this week—even though Trump has recently pulled back from threats to fire Powell before his term ends on May 15.

Bloomberg reported on Thursday that Fed Governor Christopher Waller—who voted in favor of a rate cut at the last meeting—is emerging as one of the top contenders to replace Powell.

Investors now shift their attention to next week’s US consumer price inflation data, with Reuters survey respondents expecting core inflation to rise 0.3% month-over-month in July. These figures will offer clues on whether tariff-induced inflation pressures are emerging and help shape the Fed’s policy path.

Atlanta Fed President Raphael Bostic said Thursday that although labor market risks are rising, it’s still too early to commit to a rate cut, pointing out that more data will be available before the next policy meeting on September 16–17.

Traders are pricing in a 93% probability of a rate cut in September, with at least two cuts expected before year-end.

The dollar has broadly weakened this year, falling 9.5% against a basket of major currencies as investors seek alternatives amid concerns over Trump’s volatile trade policies. Analysts expect continued pressure on the dollar but don’t foresee a sharp collapse.

Rashid added, “We expect a scenario of bending, but not breaking, for the dollar.”

As for the British pound, it touched a new two-week high at $1.34515, maintaining strong gains from Thursday after the Bank of England cut interest rates. However, the 5–4 vote revealed weak consensus on the easing path.

Goldman Sachs analysts said the split vote “suggests one of the most hawkish 25-basis-point cuts that could reasonably be expected.” The pound appears headed for its best weekly performance since late June.

Gold prices declined in the European market on Friday, pulling back from a two-week high reached earlier during Asian trading. The drop came amid profit-taking activity and pressure from a rebound in US dollar levels in the foreign exchange market.

Despite the decline, the precious metal is on track to post its second consecutive weekly gain, supported by safe-haven demand amid rising trade tensions and growing expectations of a US interest rate cut in September.

Price Overview

• Gold Prices Today: Gold fell by approximately 0.5% to $3,381.23, down from the opening price of $3,397.13. It recorded an intraday high of $3,409.10 — the highest since July 23.

• On Thursday, gold rose 0.85%, resuming gains after a brief pause, marking its fourth increase in five days as part of a consolidation phase.

US Dollar

The US Dollar Index rose 0.25% on Friday, rebounding from a two-week low at 97.95, reflecting a recovery in the US currency against a basket of major and minor currencies.

President Donald Trump announced that he will nominate Stephen Miran, head of the Council of Economic Advisers, to fill the vacant seat at the Federal Reserve.

A Bloomberg News report revealed that Fed Governor Christopher Waller is now the leading candidate to succeed Jerome Powell when his term expires on May 15, 2026.

Gold Futures

US gold futures for December delivery jumped 0.9% to $3,484.10, after hitting a record high of $3,534.10 per ounce. This widened the spread between futures prices in New York and spot prices to over $100.

The Financial Times reported on Thursday that the US had imposed tariffs on imports of one-kilogram gold bars, citing a letter from Customs and Border Protection.

The letter, dated July 31, stated that one-kilogram and 100-ounce gold bars must now be classified under a tariff code subject to higher duties — a move likely to impact Switzerland, the world’s top gold refining hub.

Weekly Performance

As of Friday’s settlement, gold prices are up about 0.55% for the week, putting the metal on course for its second straight weekly gain.

US Interest Rate Outlook

• Minneapolis Fed President Neel Kashkari stated that the Federal Reserve may need to cut interest rates in the near term in response to slowing US economic growth.

• San Francisco Fed President Mary Daly said on Monday that with growing evidence of labor market weakness and no signs of sustained tariff-driven inflation, it is time to lower interest rates.

• Following these remarks, CME Group’s FedWatch Tool shows that the odds of a 25 basis-point cut at the September meeting have increased from 88% to 94%, while odds of holding rates steady dropped from 12% to 6%.

• Expectations for a 25 basis-point rate cut in October also rose from 95% to 98%, with odds of no change falling from 5% to 2%.

• Investors are closely watching additional commentary from Fed officials throughout the day to reassess these probabilities.

Gold Market Outlook

Bryan Lan, Managing Director at Singapore-based GoldSilver Central, said that the tariffs on gold bars are likely to disrupt — or at least complicate — settlement processes among major banks. “This has already affected liquidity prices this morning, with gold prices spiking across the board,” he added.

SPDR Gold Trust

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — jumped by 6.3 metric tons on Thursday, marking the biggest daily increase since July 22. Total holdings rose to 959.09 metric tons, the highest since September 16, 2022.

The British pound rose with the opening of the European market on Friday against a basket of global currencies, extending its gains for the sixth consecutive day against the US dollar and recording its highest level in two weeks, on the verge of achieving a weekly gain, thanks to the hawkish monetary policy meeting of the Bank of England.

The Bank of England cut interest rates to their lowest level in two and a half years, and the vote on the rate cut decision showed a sharp split among members regarding the seriousness of continuing to ease monetary policy, which led to a decline in expectations of a British interest rate cut in the upcoming September meeting.

Price Overview

• Pound exchange rate today: the pound rose against the dollar by 0.1% to $1.3454 — the highest since July 25 — from the opening price of $1.3442, and recorded the lowest level at $1.3434.

• The pound rose on Thursday by 0.65% against the dollar, marking a fifth consecutive daily gain, supported by the results of the Bank of England’s monetary policy meeting.

Weekly Trading

Over the course of this week, which officially ends at today’s settlement, the British pound is up more than 1.3% against the US dollar so far, on the verge of posting its biggest weekly gain since late June.

Bank of England

In line with expectations, the Bank of England decided on Thursday to cut interest rates by 25 basis points to a range of 4.00% — the lowest level since February 2023 — in an effort to support the recently slowing British economy.

The decision passed with 5 members voting in favor and 4 members voting to keep rates unchanged. This vote ran contrary to market expectations, which had forecast 8 members to vote for the cut and only 1 for keeping rates steady.

This marks the third rate cut this year and the fifth by the Bank of England since the beginning of its monetary policy easing cycle in August 2024.

The Bank of England said in a statement: the direct impact of US tariffs is less severe than previously expected, but the general uncertainty surrounding the tariffs continues to weigh on sentiment.

Andrew Bailey

Bank of England Governor Andrew Bailey said after Thursday’s meeting: interest rates remain on a downward path, but any future rate cuts must be implemented gradually and cautiously. Bailey added: it is important not to cut the bank rate too quickly or excessively.

UK Interest Rates

• Traders have scaled back their bets on the Bank of England easing interest rates, now expecting additional cuts of just 17 basis points this year.

• The pricing of the probability of a 25-basis-point interest rate cut by the Bank of England in the September meeting is currently stable below 25%.

The Japanese yen declined in Asian markets on Friday against a basket of major and minor currencies, moving away once again from the highest levels in two weeks against the US dollar, and heading toward incurring its first loss in the last three days, due to the release of bleak data on Japanese household spending during June.

This data, along with less aggressive remarks from political leaders in Japan, led to a decline in expectations of a Japanese interest rate hike in September, pending further comments and key statements from the world’s fourth-largest economy.

Price Overview

• Japanese yen exchange rate today: the dollar rose against the yen by 0.2% to ¥147.38, from today’s opening price at ¥147.11, and recorded the lowest level at ¥146.72.

• The yen had posted a gain of about 0.2% against the dollar at Thursday’s settlement, marking a second consecutive daily gain, approaching the highest level in two weeks at ¥146.62.

Bleak Data

Data released Friday in Tokyo showed that household spending in Japan rose by 1.3% year-on-year in June, below market expectations of a 2.8% increase, after recording a 4.7% rise in May.

The decline in consumer spending in Japan may pave the way for lower prices and a slowdown in the pace of inflation in the coming period. Undoubtedly, easing inflationary pressures on policymakers at the Bank of Japan reduces the chances of further Japanese interest rate hikes before the end of this year.

Japanese Comments

Ken Saito, a senior official in the ruling party, told Reuters that the Bank of Japan should be cautious about raising interest rates due to the expected impact of US tariffs on the fragile economy.

Japanese Interest Rates

• Following the above comments and data, the pricing of expectations for the Bank of Japan to raise interest rates by a quarter percentage point at the September meeting fell from 55% to 45%.

• Minutes from the June monetary policy meeting showed that some members of the Bank of Japan’s board said the central bank would consider resuming interest rate hikes if trade tensions eased.

• To reprice those expectations, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Japan.