Investing.com - The dollar slipped lower against a basket of the other major currencies on Wednesday as markets weighed speculation over who will be the next Federal Reserve Chairman and ahead of U.S. jobs data that will be released later this week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.2% to 93.23 by 03:10 AM ET (07:10 GMT), pulling back from Tuesday’s one-and-a-half month high of 98.78.
Sentiment on the dollar was dented following reports that U.S. Treasury Secretary Steven Mnuchin favors Fed Governor Jerome Powell over former governor Kevin Warsh to lead the central bank.
Last week the Trump administration interviewed both Warsh and Powell about replacing current Chair Janet Yellen when her term expires early next year. Powell is seen as more dovish that Warsh, who has been critical of the Fed’s stimulus program in the past.
Investors were also looking ahead to Friday’s U.S. employment report for September. Signs of solid job growth would reinforce the case for a rate hike by the Fed in December.
Expectations that rates will rise help support the dollar by making U.S. assets more attractive to yield-seeking investors.
The dollar has risen in recent weeks as investors grow more optimistic about the prospect of higher interest rates and tax cuts that some expect to boost the U.S. economy.
The dollar was lower against the yen, with USD/JPY losing 0.19% to trade at 112.63.
The euro pushed higher, with EUR/USD rising 0.17% to 1.1764, pulling away from Tuesday’s one-and-a-half month low of 1.1695.
The common currency has been pressured lower by fresh concerns over political risk in the euro zone in the wake of an independence vote in Spain’s Catalonia. The vote came a week after German Chancellor Angela Merkel’s conservative alliance lost ground in that country’s election.
Sterling pushed higher against the dollar, with GBP/USD up 0.17% to 1.3256 ahead of UK service sector data that was expected to show that growth remained solid last month.