The US dollar remained confined within its recent trading range on Wednesday, as investors chose to stay neutral following another round of weak US economic data and ahead of President Donald Trump’s upcoming appointment to the Federal Reserve Board.

Trump said on Tuesday that he would decide on a nominee to replace outgoing board member Adriana Kugler by the end of the week, and has narrowed the shortlist for the next Fed Chair — to succeed Jerome Powell — to four candidates.

That same day, data showed that US services sector activity remained unexpectedly flat in July, while input costs surged at their fastest pace in nearly three years, highlighting the economic impact of Trump’s tariffs, which are also starting to weigh on corporate profits.

Still, traders were cautious about entering new positions until the Federal Reserve’s direction becomes clearer, amid growing concerns that partisan loyalty could creep into the traditionally reserved and independent world of monetary policy.

The dollar last rose by 0.1% against the Japanese yen to 147.78, while the euro held steady at $1.1577. The British pound slipped 0.1% to $1.329.

Francesco Pesole, strategist at ING Bank, wrote in a research note: “Trump’s public attacks on the Bureau of Labor Statistics over job data revisions haven’t had a major market impact so far, but it’ll be telling if the new Fed Chair nominee echoes that narrative. If that happens, it could fuel fears of the Fed disconnecting from official data — a scenario we view as clearly negative for the dollar.”

Although the dollar’s moves have been quiet this week, the currency has yet to recover from Friday’s sharp losses — its biggest single-day drop in nearly four months — after a troubling jobs report.

Trump had fired BLS Commissioner Erica McEnturfer last week following the release of July’s jobs report.

The dollar rose by 0.1% against a basket of currencies to 98.785, still well below Friday’s high of 100.25, reached just before the nonfarm payrolls data was released.

Markets are still pricing in an 86.5% chance of a Fed rate cut in September, with roughly 56 basis points of easing priced in by year-end.

However, data such as Tuesday’s ISM services PMI highlights the complexity of the Fed’s challenge — balancing price pressures from Trump’s tariffs with signs of a weakening US economy.

Ray Attrill, head of FX strategy at National Australia Bank (NAB), said: “The ISM services index clearly smells of stagflation… and that’s a double-edged sword in terms of monetary policy implications.”

He added: “For now, we think the market may be showing too much confidence in a September move being a done deal.”

US Treasury yields rose, with the 10-year yield climbing 4.2 basis points to 4.238%, and the 2-year yield rising 2.9 basis points to 3.774%, after a $58 billion auction of three-year notes that analysts viewed as relatively weak, with a bid-to-cover ratio of 2.53.

More auctions are scheduled this week, including $42 billion in 10-year notes on Wednesday and $25 billion in 30-year bonds on Thursday.

Among other currencies, the Australian and New Zealand dollars both rose 0.3%, with the Aussie reaching $0.64895 and the Kiwi at $0.59181.

Gold prices declined in European markets on Wednesday for the first time in five sessions, retreating from a two-week high due to active correction and profit-taking. However, further losses were limited by a weaker US dollar against a basket of global currencies.

Trading remained within a tight range as investors avoided building large positions ahead of President Donald Trump’s upcoming decisions on Federal Reserve appointments.

The Price

• Gold prices today: Gold fell by 0.35% to $3,369.15, down from the opening level of $3,380.64. The session high was $3,385.41.

• At Tuesday’s settlement, gold prices rose by 0.2%, marking a fourth consecutive daily gain, and hit a two-week high of $3,390.51 per ounce, supported by rising expectations of a US interest rate cut in September.

The US Dollar

The US Dollar Index declined by 0.1% on Wednesday, resuming losses after a two-day pause and nearing a two-week low — reflecting weakness in the US dollar against global currencies.

Market pricing for a 25-basis-point US interest rate cut in September rose from 85% to 90% following data showing an unexpected slowdown in US services activity during July.

Trump Appointments

Markets are closely watching President Donald Trump’s nominations to the Federal Reserve following the resignation of Governor Adriana Kugler last Friday, as well as his pick for the head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he would soon announce decisions regarding Kugler’s short-term replacement, including his choice for the next Federal Reserve Chair. Treasury Secretary Scott Bessent has been ruled out as a candidate to succeed current Chair Jerome Powell, whose term ends in May 2026.

Trump said that Bessent “does not want” to become Fed Chair, but noted that four other candidates remain in contention.

US Interest Rates

• San Francisco Fed President Mary Daly stated on Monday that, amid increasing evidence of labor market weakness and no indication of ongoing inflation from tariffs, the time has come to lower interest rates.

• According to CME Group’s FedWatch Tool, the probability of a 25-basis-point rate cut in the September meeting currently stands at 88%, while the chance of no change is at 12%.

• For the October meeting, the probability of a 25-basis-point cut is holding at 95%, with a 5% chance of no change.

• To reprice these expectations, investors are awaiting comments from several Federal Reserve officials throughout the day.

Gold Outlook

Bryan Lan, managing director at Singapore-based trading firm GoldSilver Central, said: “We see gold holding up, and in fact, it’s slightly trending higher.” He added: “We expect gold to test the upper end of the trading range near $3,393, and possibly even $3,400.”

SPDR Fund

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by approximately 1.14 metric tons on Tuesday — the second consecutive daily increase — bringing the total to 955.94 metric tons, the highest level since July 28.

The euro rose in European markets on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar and nearing a two-week high, driven by growing concerns over Federal Reserve stability.

Expectations of a European interest rate cut in September have declined due to persistent inflationary pressures on European Central Bank policymakers. To reprice these expectations, investors are awaiting further economic data from the Eurozone.

The Price

• EUR/USD exchange rate today: The euro rose against the dollar by 0.1% to $1.1586, up from today’s opening price of $1.1575. The lowest level recorded was $1.1564.

• The euro closed Tuesday up by around 0.1% against the dollar, resuming gains that had paused the previous day due to correction and profit-taking from a two-week high of $1.1597.

The US Dollar

The US Dollar Index declined by 0.1% on Wednesday, resuming losses that had paused for two days, and moving back toward a two-week low — reflecting weakness in the US dollar against a basket of global currencies.

Market pricing for a US interest rate cut in September rose from 85% to 90% after data showed an unexpected slowdown in US services sector activity in July.

Markets are focusing on President Donald Trump’s nominations to the Federal Reserve following the resignation of Governor Adriana Kugler last Friday, as well as his pick for the next head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he will soon announce decisions regarding Kugler’s short-term replacement, including his choice for the next Federal Reserve Chair. Treasury Secretary Scott Bessent was ruled out as a candidate to succeed current Chair Jerome Powell, whose term ends in May 2026.

Trump said that Bessent “does not want” to become Fed Chair, but noted that four other candidates are in the running for the position.

European Interest Rates

• The Consumer Price Index in Europe rose by 2.0% in July, above market expectations of a 1.9% increase and matching the previous reading of 2.0%.

• This data highlights ongoing inflationary pressures on policymakers at the European Central Bank.

• According to Reuters sources, a clear majority at the latest ECB meeting expressed a preference to keep interest rates unchanged in September — for the second consecutive meeting.

• Market pricing of a 25-basis-point rate cut by the ECB in September is currently holding below 30%.

• To reprice these expectations, investors are closely watching upcoming economic data in Europe, along with comments from ECB officials.

The Japanese yen rose in Asian markets on Wednesday against a basket of major and minor currencies, resuming gains that had briefly paused against the US dollar and moving toward a two-week high, after data showed an increase in wages in Japan — a development that places further pressure on policymakers at the Bank of Japan.

The US dollar remains under negative pressure amid concerns about stability at the Federal Reserve, as President Donald Trump prepares to fill a vacant seat on the Fed Board of Governors by the end of the week.

The price

• USD/JPY exchange rate today: The dollar fell against the yen by around 0.2% to ¥147.37, down from the opening price of ¥147.61. The highest level recorded was ¥147.75.

• At Tuesday’s close, the yen had lost 0.35% against the dollar, marking its first loss in three days, due to correction and profit-taking after earlier reaching a two-week high at ¥146.62.

Japanese wages

Japan’s Ministry of Labor said on Wednesday that total monthly cash earnings and a separate set of full-time wage data rose by 2.5% year-on-year in December — the fastest pace since February. Cash earnings also rose by 1.4% in May, upwardly revised from 1.0%. Forecasts had pointed to a 3.1% rise.

Wage growth in Japan may pave the way for further price increases and an acceleration in inflation over the coming period. Undoubtedly, mounting inflationary pressures on Bank of Japan policymakers enhance the likelihood of additional interest rate hikes before the end of the year.

Japanese interest rates

• Following the wage data, market pricing for a 25-basis-point rate hike by the Bank of Japan at its September meeting rose from 50% to 55%.

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

• The BOJ confirmed after last week’s meeting that it would raise interest rates if economic and price conditions align with projections.

• BOJ Governor Kazuo Ueda said that the recent trade deal between the US and Japan represents a significant positive step toward strengthening economic stability by reducing uncertainty that has long burdened future expectations.

• To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.

The US dollar

The US Dollar Index fell by 0.1% on Wednesday, resuming its losses after a two-day pause, and nearing a two-week low — reflecting continued weakness in the US dollar against a basket of global currencies.

The probability of a US interest rate cut in September rose from 85% to 90% following data showing an unexpected slowdown in US services sector activity in July.

Markets are focusing on President Trump’s nominations to the Federal Reserve following the resignation of Fed Governor Adriana Kugler last Friday, as well as his pick for the head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he would soon announce decisions regarding Kugler’s short-term replacement, including his choice for the next Fed Chair. Treasury Secretary Scott Bessent was ruled out as a candidate to succeed Jerome Powell, whose term ends in May 2026.

Trump said that Bessent “does not want” to be Fed Chair, but noted that four other candidates are in the running for the position.