By Rocky Swift and Rae Wee
TOKYO, Jan 30 (Reuters) – The dollar rose on Friday, clawing back some of its slide on the week, after U.S. President Donald Trump said he would soon announce his nominee to head the Federal Reserve while optimism grew for Washington to avert a government shutdown.
Trump said he intends to name his pick to replace Fed Chair Jerome Powell on Friday, following news that former Fed Governor Kevin Warsh visited the White House. The Japanese yen fell, and cryptocurrencies tumbled.
The greenback recovered some of this week’s losses after tension between Trump and Cuba, Iran, Venezuela, Greenland and Europe hit some investors’ confidence in U.S. assets.
“The appointment of Warsh, if it’s true, will be seen as someone who can, in a way, remain independent, and not someone seen as likely to be subservient to Trump’s wishes,” said Khoon Goh, head of Asia research for ANZ in Singapore.
“Any sensible market participant would not want to carry a big position into the weekend,” he added. “So some of this could just be positioning lightening up. If you’re short dollars, you’ve done well, take your chips off the table.”
The dollar index, which measures the greenback against a basket of currencies, rose 0.4% to 96.55, trimming its weekly slide to 0.9%.
The euro dipped 0.4% to $1.1922, while the yen weakened 0.5% to 153.85 a dollar. Sterling slid 0.4% to $1.3751.
Bloomberg News said Warsh would get the nod to replace Powell at the Fed, while a person familiar with the matter told Reuters he met Trump at the White House on Thursday.
The dollar also received a lift after Republican and Democratic lawmakers hammered out a deal to stave off a looming government shutdown.
Escalating conflict abroad and unease over domestic immigration crackdowns have hammered the U.S. currency, driving the dollar index to a four-year low earlier this week.
Overnight, the White House said Trump signed an executive order for tariffs on countries that provide oil to Cuba, while he threatened new tariffs on Canada and said the United States was decertifying business jets made there.
With tension simmering in Iran, Trump said on Thursday he planned to speak with leaders in Tehran, even as the U.S. dispatched another warship to the Middle East and Pentagon chief Pete Hegseth said the military would be ready to carry out whatever the president decided.
The dollar closed last week with its biggest fall since last April, driven in part by the Trump administration’s tariff threats against European countries if they stood in the way of his ambition of buying Greenland.
The spat over Greenland was the start of wider geopolitical concerns that have dragged the currency broadly lower, said Westpac Group senior economist Mantas Vanagas.
“It’s the fact that the ‘Sell America” trade has resurfaced, and investors are questioning to what extent the United States is still a trustworthy partner for other economies,” he added.
The dollar found some support after the Fed held interest rates steady on Wednesday against the backdrop of what Fed Chair Powell described as a solid economy and diminished risks to both inflation and employment.
The yen broke back above 154 to the dollar, but is still poised for its second straight weekly gain, as Japanese policymakers hinted at possible coordinated currency market intervention with the United States to defend the currency.
The yen fell to a near 18-month low last week as concerns about Japan’s finances mounted before a snap election in which Prime Minister Sanae Takaichi and her opponents are campaigning on a plank of tax cuts.
The Australian dollar weakened 0.7% versus the greenback to $0.6997, and the kiwi lost 0.5% to $0.6046.
In cryptocurrencies, bitcoin tumbled 2.2% to $82,519.22, touching the weakest since November 21, while ether sank declined 3% to $2,732.04.
(Reporting by Rocky Swift in Tokyo; Editing by Sam Holmes and Clarence Fernandez)
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