USD slips as markets react to Bessent selection – Scotiabank

The US Dollar (USD) is starting off Thanksgiving week on the defensive as markets react to the President-elect Trump’s selection of Scott Bessent as Treasury Secretary, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Markets see Treasury Sec. pick as moderating force

“Bessent, a hedge fund manager with more market-friendly views (pro-growth, hawkish on the Federal deficit, favours gradualist approach to tariffs) is viewed as someone who may be able to temper the president-elect’s more aggressive policy initiatives. He has also said he wants to preserve the USD’s status as the world’s reserve currency. Stocks are mostly firmer in Europe and US equity futures are positive.”

“Treasurys are outperforming other major bond markets by 5-6bps. The minor drift in the USD does not mean its post-election rebound is over. I had noted last week that some market participants may want to square up USD longs into the US holiday break this week and the Bessent news is a good excuse to do that. The USD is unlikely to lose too much ground, particularly because much of the USD’s recent strength has been tied to solid data reports and the resulting adjustment in Fed policy expectations.”