The dollar (USD) fell amid speculation about new cabinet changes for President Trump; the White House denied last night that the president intends to fire top national security adviser McMaster. The Washington Post reported that President Donald Trump plans to fire his national security adviser, something the White House press secretary later denied. Treasury bonds gained ground, followed by European bonds, gold, and the Swiss franc. McMaster's removal as national security adviser would follow the resignation of top White House economic adviser Gary Cohn and the ouster of Secretary of State Rex Tillerson. Investors had focused on the likelihood of increased trade protectionism from the United States after Larry Kudlow, a new member of the White House, said he would sell gold and buy the dollar on Thursday.
Investors received signals at the close of the week that an ECB policy shift is far from imminent. An unexpected downward revision to eurozone inflation and a decline in labor costs came just hours after ECB chief economist Peter Praet opposed any early adjustment to the institution's language on ongoing stimulus. He said policymakers had been caught off guard by an influx of new workers that could be suppressing wage and price pressures. Investors have been watching for any decision by the ECB to end its bond-buying program and begin work on an interest rate hike that could come as early as mid-2019—a tightening measure that would have waited eight years, during which crisis measures aimed at preventing deflation and the breakup of the bloc have been adopted.
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