Dollar rally unravels as investors shrug off Trump U-turns

NEW YORK – The dollar staged a broad retreat on Thursday, as investor gloom over the lack of progress toward defusing the US-China trade war reasserted itself following an interlude of optimism the previous day.

US assets, including the dollar, rallied on Wednesday after US President Donald Trump backed down from threats to fire Federal Reserve Chair Jerome Powell and appeared to soften his stance on China.

Treasury Secretary Scott Bessent said separately that the de facto embargo on US-China trade was unsustainable, but that the US would not move first in lowering its levies of more than 100% on Chinese goods.

By Thursday, those dollar gains had unraveled. China said no negotiations had been held on the economy and trade and it urged the US to lift all unilateral tariff measures if it really wished to resolve the issue, leaving investors roughly where they were earlier in the week in terms of clarity.

However, Trump maintained on Thursday that trade talks with China are underway. “They had a meeting this morning,” he told reporters, declining to say to whom he was referring.

“It seems like there’s a gulf as wide as the Pacific Ocean between how the US and China are viewing trade,” said Matt Weller, head of market research at StoneX. “And I think as long as that gulf remains, the rallies in the dollar might be short-lived.”

The yen led the charge higher, leaving the dollar down 0.54% on the day at 142.700, but still above the 140-mark breached last week.

The dollar has been the biggest casualty of Trump’s on-off tariffs, dropping 4.8% so far in April, which would mark its largest monthly decline since November 2022.

Investors had been shaken over the last few days when Trump made a series of verbal attacks on Powell over his reluctance to cut interest rates until justified by economic data.

Such has been the investor pullback from the dollar that it is on course for its worst start to the year against a basket of currencies since the 1970s, according to LSEG data.

“There were hopes of a thaw in the US-driven trade dispute with absolutely everyone,” said Trade Nation strategist David Morrison.

“(Trump) softened his tone towards China, calling on them to come and negotiate. But it turns out it takes two to tango, and for now, the Chinese leadership has decided to let the Trump administration stew in its own mess,” he added.

The Swiss franc, which is around its strongest against the dollar in more than a decade as a result of hefty safe-haven flows this month, rose, leaving the US currency down 0.33% on the day at 0.82795 francs.

The pound rose 0.55% to USD 1.3325. UK finance minister Rachel Reeves said on Thursday she was confident Britain could reach a trade deal with the United States.

Bitcoin tracked the dollar lower, falling 0.23% on the day to USD 93,469. Meanwhile, Trump’s meme coin surged 33% overnight after the online promotion of a gala dinner with the president for the top 220 buyers of the USD TRUMP coin. It is still only worth roughly a quarter of what it was at its launch in January.

(Reporting by Hannah Lang in New York and Amanda Cooper in London; additional reporting by Tom Westbrook; Editing Jamie Freed, Kate Mayberry, Kirsten Donovan, Barbara Lewis and Richard Chang)

Oil prices settle up on weaker US dollar, mixed economic news

NEW YORK – Oil prices edged up on Thursday as investors weighed a weaker US dollar, potential OPEC+ output increase, mixed economic news, conflicting US tariff signals and news from the Russia-Ukraine war.

Brent crude futures rose 43 cents, or 0.7%, to settle at USD 66.55 a barrel. US West Texas Intermediate (WTI) crude rose 52 cents, or 0.8%, to settle at USD 62.79.

In the US, the number of people filing for unemployment benefits rose marginally last week, suggesting a resilient labor market despite economic turbulence caused by tariffs on imported goods.

Businesses are increasing prices and cutting financial guidance due to higher costs stemming from US President Donald Trump’s trade war, which has also roiled global supply chains.

US Federal Reserve officials indicated in television interviews they see no urgency to change monetary policy as they seek more information to determine how trade tariffs are affecting the economy.

“Markets are still trying to make sense of the data, as employment stats show a resilient labor market while the Fed tempers bullishness with commentary that unemployment rates may be affected by tariffs,” analysts at energy consulting firm Gelber and Associates said in a note.

The US dollar staged a broad retreat on Thursday, as investor gloom over the lack of any real progress towards defusing the US-China trade war reasserted itself.

A weaker US currency makes dollar-priced commodities like oil less expensive for buyers using other currencies.

Supply uncertainty

Iranian Foreign Minister Abbas Araqchi said on Thursday he was ready to travel to Europe for talks on Tehran’s nuclear program. France indicated European powers were ready for dialogue if Tehran showed it was seriously engaged.

Successful talks with Europe and the US would likely result in the lifting of sanctions on Iranian oil exports. Iran is the third biggest oil producer in OPEC behind Saudi Arabia and Iraq.

Trump criticized Russian President Vladimir Putin on Thursday after Russia pounded Kyiv with missiles and drones overnight, saying “Vladimir, STOP!”

On Wednesday, Trump said Ukraine’s leader was hampering peace talks on ending Russia’s war in Ukraine, which could allow more Russian oil to flow to global markets. Russia is one of the world’s biggest oil producers along with the US and Saudi Arabia.

Still, many European countries are trying to phase out imports of Russian oil due to the war. European Commission President Ursula von der Leyen said the commission will present a roadmap in the next two weeks on keeping an EU pledge to quit Russian fossil fuels by 2027.

Russia is a member of the OPEC+ group. Reuters reported on Wednesday that several OPEC+ members had suggested the group accelerate oil output increases for a second month in June.

“They would be stuffing barrels into a global economy that is already struggling with US tariffs and a trade war between the two largest global economies – the US vs. China,” Bob Yawger, director of energy futures at Mizuho, said in a note.

“OPEC+ would be hard pressed to pick a worse time to add barrels,” Yawger said.

(Reporting by Scott DiSavino in New York, Robert Harvey in London and Colleen Howe in Beijing; Editing by David Goodman and David Gregorio)

Dollar jumps after Bessent forecasts de-escalation in US-China trade tensions

The dollar regained some ground on Tuesday after US Treasury Secretary Scott Bessent said in a closed-door meeting that he believes there will be a de-escalation in US-China trade tensions.

Bessent said neither side sees the status quo as sustainable, adding that the Trump administration’s goal was not to decouple the world’s two largest economies, according to a person who heard his presentation to investors at a JP Morgan conference.

The US dollar index, which measures the greenback against six other major currencies, was up 0.6% at 98.937, after sinking as low as 97.923 in the previous session, a level not seen since March 2022.

“There are signs that pressure is mounting on the White House to calm things down,” said Adam Button, chief currency analyst at ForexLive.

The dollar hovered around multi-year lows versus the euro and the Swiss franc on Tuesday as President Donald Trump’s attacks on the Federal Reserve raised concerns about the central bank’s independence.

Doubts about Fed independence threaten the dollar’s value as a reserve currency, with analysts noting possible divestments from what many consider over-exposure to US assets.

Trump ramped up his criticism of Fed chief Jerome Powell on Monday, calling him a “major loser” and demanding that he lower interest rates “NOW” or risk an economic slowdown.

“The firing of Jerome Powell would be catastrophic for the US dollar and confidence in US capital markets in general,” said Button.

On Friday, White House economic adviser Kevin Hassett said the president and his team were continuing to study whether they could fire Powell, who said last week the central bank can afford to be patient in judging how to set policy.

“The current worst-case scenario for the greenback is that Powell caves in and delivers an emergency rate cut, although that remains a low-probability event,” said Francesco Pesole, strategist at ING.

Barclays lifted its euro/dollar forecast to USD 1.15 based on the assessment of the removal of the Fed chair as a low-likelihood event, but argued that further revisions could therefore soon be needed should the situation escalate.

China on Monday accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the United States at its expense.

The dollar was up 0.42% at 141.470 yen, after earlier falling below the psychological 140 level for the first time since mid-September.

While some analysts bet Washington will pressure Tokyo to help prop up the yen, Japan sees little scope for direct action.

“Underlying dynamics differ and the yen’s rise looks more fragile than the euro’s,” said Shusuke Yamada, forex strategist at BofA Japan, after flagging that both currencies gained about 12% against the US dollar.

“The yen’s rise has accompanied a bigger rise in speculative positioning and increasing focus on a potential US-Japan currency deal,” while “structural outflows from Japan have gone out of market radar,” he added.

The greenback rose 1.17% to 0.819 Swiss franc, having reached a decade-low of 0.8042 in the previous session.

The euro fell 0.73% to USD 1.1424, after jumping to USD 1.1573 on Monday for the first time since November 2021.

(Reporting by Hannah Lang in New York; additional reporting by Stefano Rebaudo; Editing by Kirsten Donovan, Bernadette Baum, and Andrea Ricci)

Long-term US yields decline on mixed safe-haven demand

NEW YORK – US Treasury long-term yields declined on Tuesday, reversing some of Monday’s bond selloff, as fears that President Donald Trump’s trade policies could trigger a US economic slowdown provided some demand for US government bonds.

Yields, which move inversely to prices, had jumped on Monday as Trump’s calls to remove Federal Reserve Chair Jerome Powell caused market concerns over US economic stability and institutional strength. While those worries continued to agitate markets on Tuesday, bonds benefited from some safe-haven demand due to continued fears of an impending hit to US economic activity because of Trump’s tariffs on key US trade partners.

“You have a push and pull dynamic,” said Nathan Thooft, chief investment officer and senior portfolio manager at Manulife.

“You have forces that are potentially negative for Treasuries, as in higher yields driven by the US losing some of its glamour and glitter [that come from] … being the primary if not sole safe haven, but at the same time Treasuries are still used inside the US as well as by many people outside the US, as a source of safety,” he said.

Tuesday’s session, light on economic data, saw investors focusing on remarks from Fed officials after Trump in recent days accused the Fed chair of being slow to ease rates and hinted that he might try to remove him.

The attacks on Fed chair Powell were “undermining what little (market) confidence still existed out there,” said Dean Smith, chief strategist and portfolio manager at FolioBeyond.

Federal Reserve Bank of Philadelphia President Patrick Harker said trust in the central bank was one of its greatest powers. This credibility has built up over time “by being politically independent and as objective as human beings can be,” he said. Minneapolis Fed President Neel Kashkari said the Fed’s monetary policy independence was foundational and the key to better economic outcomes.

The attacks on the Fed could exacerbate existing concerns over Trump’s erratic policymaking and its impact on foreign investor appetite for Treasuries, analysts said.

“With increasing rhetoric from the administration admonishing the Fed to cut rates and the markets entertaining intensifying discussions about the possibility of replacing the Fed chair, we don’t expect a rush back into the market from abroad,” BNY’s Americas Macro Strategist John Velis said in a note. “The haven status of such assets is increasingly in question.”

The 10-year Treasury term premium, a measure of the compensation investors demand for the risk of holding long-dated US government debt, rose to 0.84 basis points on Monday, its highest level since 2014, according to the latest available data by the Federal Reserve Bank of New York.

Benchmark 10-year yields were last at 4.391%, about one and a half basis points lower than Monday, while 30-year yields declined by about three basis points to 4.881%. Two-year yields were last at 3.809%, up from 3.752% on Monday.

The closely watched yield curve that plots two-year yields against 10-year yields flattened to 58 basis points, after hitting an over three-year high of about 65 basis points on Monday. That curve has been steepening meaningfully over the past few weeks, suggesting investors anticipate high interest rates over the long term, following an initial period of monetary policy easing.

On Tuesday, the Treasury sold USD 69 billion in two-year notes, part of a total of USD 183 billion in Treasury issuance this week.

The two-year notes were sold with a high yield of 3.795%, which was nearly half a basis point above where the market was at the time of bidding, in a sign investors demanded higher compensation to absorb the debt sale.

(Reporting by Davide Barbuscia; Editing by Andrea Ricci)

Gold takes a breather after hitting USD 3,500 on higher stocks, stronger dollar

Gold fell more than 1% on Tuesday after briefly touching a record high of USD 3,500 earlier in the session, as comments by US Treasury Secretary Scott Bessent hinting at a thaw in US-China trade tensions fueled optimism in equities and strengthened the dollar.

Spot gold fell 1.5% to USD 3,372.68 an ounce by 3:46 p.m. EDT (1946 GMT), after rising as much as 2.2% to USD 3,500.05 earlier in the session. Meanwhile, US gold futures settled 0.2% lower at USD 3,419.40.

“Comments (of the US Treasury Secretary) this afternoon that hinted towards a possible thaw in the trade war with China, was really when (gold) started to sell off,” said Bob Haberkorn, senior market strategist at RJO Futures.

Bessent said Tuesday that he believes there will be a de-escalation in US-China trade tensions, though he described the future negotiations with Beijing as a “slog” that has yet to begin.

US stocks jumped more than 2%, and the dollar rebounded, buoyed by Bessent’s comments, after he called the tariff standoff unsustainable.

The dollar index rose 0.7% against its rivals, making bullion more expensive for holders of other currencies.

“Rallies in the stock market and the US dollar index today are negative for the gold market,” said Jim Wyckoff, senior analyst at Kitco Metals.

Meanwhile, spot gold, up 29% so far this year, notched its 28th record high on Tuesday as it surged to the USD 3,500-per-ounce mark for the first time.

JPMorgan expects the rally to continue, projecting that gold will surpass USD 4,000 an ounce next year amid rising recession risks, higher US tariffs, and persistent US-China trade tensions, the bank said in a note on Tuesday.

Traders will also be watching speeches by several Federal Reserve officials later this week, hoping for insights into future monetary policy amid concerns about the central bank’s independence.

Non-yielding gold acts as a hedge against global uncertainty and inflation and tends to thrive in a low-interest-rate environment.

Gold’s relative strength index (RSI) stands at 74, indicating that the metal is overbought.

Spot silver fell 0.7% to USD 32.47 an ounce, platinum was down 0.8% at USD 953.64, and palladium jumped 0.6% to USD 932.75.

(Reporting by Brijesh Patel and Ishaan Arora in Bengaluru; Editing by David Evans and Mohammed Safi Shamsi)

US markets’ crisis point hinges on a triple threat

WASHINGTON – A selloff in US stocks, long-term government bonds, and the dollar clearly traces back to policy choices by President Donald Trump’s administration. Recent moves spawn a trio of worries: first, that a trade war will hit business and destabilize the United States’ role in the world; second, that a USD 4.5 trillion tax cut plan could explode an already-historic fiscal deficit; and, finally, that pressure on Federal Reserve Chairman Jerome Powell could warp monetary policy. Trump has not yet forced an irrevocable break, but cracks are spreading at an alarming pace.

Investors are piling into short-term US debt even as longer-term Treasuries sell off, a potential sign of hesitancy to bear the risk of erratic policy shifts. Yields on 20-year bonds topped 4.9% on Monday. Similarly, cash is moving into non-US assets as the dollar tumbles.

It makes some sense: Trump has imposed, then partially lifted, tariffs of a magnitude not seen in over a century, sparking worries of a break with the global community. The consequences are slow to filter through into economic data, but early signs are arising. South Korean exports to the US tumbled 14% in April’s first 20 days from the year before, particularly hitting cars and parts.

The President places the onus on Powell, dubbing him “Mr. Too Late” for not lowering interest rates and warning that an economic slowdown could result. The Fed chair is clear that he prioritizes keeping price pressures anchored — making any move unlikely as the public’s inflation expectations shift well above the Fed’s target.

Trump has pondered firing Powell in a legally uncertain maneuver that would threaten the independence safeguarding the central bank’s credibility, though advisers, including Treasury Secretary Scott Bessent, have pushed back, the Wall Street Journal reported. Even if that one pillar of economic management remains intact, though, Republicans’ push for gigantic tax cuts is continuing, just as the US budget deficit has widened to a near-record USD 1.3 trillion in the six months since October.

Negotiations are underway to stanch the red ink with spending cuts or revenue. But the US sustains its fiscal profligacy thanks to international investors who treat Treasuries as the world’s risk-free asset. If they demand a meaningful risk premium, financing USD 36.6 trillion in national debt may become very expensive. With Trump pushing to bend monetary policy and the budget deficit potentially moving in the wrong direction, uncertainty is only rising.

Despite the gloom, US capital markets still have no clear substitute. An orderly transition when Powell’s term ends in 2026 could smooth institutional frictions. And tariff-reducing trade deals could ameliorate the worst of the economic damage. But the slowly creeping cracks point to weaknesses that could explode if any one policy move pushes to a critical point.

CONTEXT NEWS

Long-term treasury yields climbed once again on April 21 after peaking earlier in the month, with 20-year Treasury yields rising above 4.9%.

President Donald Trump has leveled criticism at Federal Reserve Chair Jerome Powell, posting on social media that he should lower interest rates. Trump has discussed whether he could fire Powell before the end of his term in 2026, the Wall Street Journal reported.

The S&P 500 Index fell 2.8% by 12:30 p.m. ET on April 21 amid a lack of progress towards agreements with US trading partners that would lower tariffs introduced earlier this month.

The Republican-controlled House of Representatives and Senate have started work on drafting a package to advance Trump’s legislative agenda, with debate beginning over spending cuts needed to offset the cost of extending and expanding tax cuts for individuals and businesses.

(Editing by Jonathan Guilford and Pranav Kiran)

Gold extends record run, breaks above USD 3,400/oz on safe-haven rush

Gold surged above USD 3,400 to a record high on Monday, as the dollar weakened and uncertainty over the economic impact of US-China trade tensions spurred demand for safe-haven bullion.

Spot gold rose 2.7% to USD 3,417.62 an ounce at 1:46 p.m. ET (1746 GMT). Prices hit a record high of USD 3,430.18 earlier in the session.

US gold futures settled 2.9% higher at USD 3,425.30.

The dollar tumbled to its lowest level in three years as investor confidence in the US economy took another hit over President Donald Trump’s comments about Federal Reserve chairman Jerome Powell. A weaker dollar makes bullion more appealing for other currency holders. USD/

On the trade war front, China accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the US at its expense.

“As tariff tensions continue to move at a fevered pitch, we continue to see gold prices move to the upside as a safe haven response,” said David Meger, director of metals trading at High Ridge Futures.

“There’ll be pullbacks and profit-taking at times, but we still believe in the underlying trend to be on sideways to higher trajectory.”

Gold, which is considered a hedge against economic uncertainties and known to be a highly liquid asset, has hit multiple record highs and gained more than USD 700 since the start of 2025. It surpassed USD 3,300 last Wednesday and its strong momentum pushed it up by another USD 100 in just a few days.

“These much bigger daily price moves in gold are one early clue this very mature bull market run is close to climaxing and that a near-term market top may be close at hand, from a time perspective, more so than a price perspective,” said Jim Wyckoff, senior analyst at Kitco Metals.

Among other metals, spot silver was steady at USD 32.60 an ounce, platinum was down 0.6% at USD 961.61 and palladium slipped 3% to USD 934.25.

(Reporting by Ashitha Shivaprasad and Daksh Grover in Bengaluru; Editing by Jane Merriman, Bill Berkrot, and Shounak Dasgupta)

Dollar hits three-year low as Trump attacks threaten Fed’s independence

NEW YORK – The dollar tumbled on Monday to its lowest level in three years as investor confidence in the US economy took another hit over President Donald Trump’s attacks on the Federal Reserve chairman, potentially putting the central bank’s independence under threat.

Trump ramped up his criticism of Fed Chair Jerome Powell on Monday via social media, calling him a “major loser” and demanding that he lower interest rates immediately.

Against a basket of currencies, the dollar slid as low as 97.923 on Monday, its lowest since March 2022. The currency also fell to a decade-low against the Swiss franc, while the euro broke above USD 1.15.

White House economic adviser Kevin Hassett said on Friday that the president and his team were continuing to study whether they could fire Powell, just a day after Trump said Powell’s termination “cannot come fast enough” as he called for the Fed to cut interest rates.

Trading was thin with most European markets and those in Australia and Hong Kong closed for Easter Monday. Most markets globally were closed on Friday for a holiday.

US stocks suffered steep losses on Monday after Trump’s social media post about Powell, with all three major indexes down more than 2%, and steep losses in the “Magnificent Seven” group of megacap growth stocks weighing heaviest on the tech-heavy Nasdaq.

“Powell does not report directly to Trump, so (Trump) cannot actually fire him. He can only be removed from office under certain procedures, which one would think have a higher barrier,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho. “But can the president move the cogs and wheels to undermine the perceived independence of the Fed? Sure, he could.”

Against the Swiss franc, the dollar sank more than 1.5% to a 10-year trough of 0.8063, while the euro peaked at USD 1.1535, its highest since November 2021.

The dollar also hit a seven-month low against the yen, and was last at 140.66. CFTC data showed net-long positions on the Japanese yen hit a record high for the week ended April 15.

“If the central bank’s dual mandate — preserving price stability and fostering full employment — is diluted with a new set of objectives defined by the White House, policymakers could find themselves unable to tighten policy dramatically in the face of a sudden increase in prices,” said Karl Schamotta, chief market strategist at Corpay in Toronto, in a research note.

Sterling rose to its highest since September at USD 1.34, while the Australian dollar scaled a four-month high of USD 0.6430. The New Zealand dollar reclaimed the USD 0.6000 level for the first time in more than five months.

“It’s really a buffet for any dollar bear… from the heightened uncertainty around the self-harm from tariffs to the loss of faith even prior to the Powell news,” Varathan said.

Trump’s sweeping tariffs and uncertainty over his trade policies have sent global markets into a tailspin and darkened the outlook for the world’s largest economy, in turn weakening the dollar as investors pull money out of US assets.

Elsewhere, the onshore yuan rose to a two-week high before paring some of those gains. Its offshore counterpart was last at 7.2931 per dollar.

China on Monday kept its benchmark lending rates steady for the sixth successive month, matching expectations. But markets are betting on more stimulus being rolled out soon in the face of the escalating China-US trade war.

(Reporting by Hannah Lang in New York and Rae Wee in Singapore; Editing by Marguerita Choy and Jane Merriman)

Dollar would be biggest casualty if Trump fires Fed Chair: McGeever

ORLANDO, Florida – If US President Donald Trump wants a weaker dollar, threatening to fire Federal Reserve Chair Jerome Powell is a sure-fire way of getting it. But rarely in markets, economics and policymaking has the phrase “be careful what you wish for” ever been more apt.

Trump’s frustration with Powell for not lowering interest rates goes back to his first term in the White House, but his latest verbal attacks mark an escalation that could quickly turn a dollar slump into a potentially catastrophic rout.

That’s not hyperbole. The dollar is down 9% this year and has lost almost 6% of its value this month alone, a slide that accelerated when Trump’s “Liberation Day” tariffs threw markets into a downward spiral of uncertainty and confusion.

The dollar’s decline this year has wiped out all of last year’s gains, which is quite a feat considering the tsunami of capital inflows as investors around the world plowed trillions into Wall Street on the back of the “US exceptionalism” story.

Measured against a basket of major currencies, the dollar is on track for its steepest monthly decline since the Global Financial Crisis of 2007-09, and its eighth biggest since the era of free-floating exchange rates was introduced more than 50 years ago.

Excluding the GFC, the last time the dollar fell this much in a calendar month was in 1985, just before five countries agreed to weaken what was legitimately an overvalued dollar via the famed “Plaza Accord” in September of that year.

The scale of dollar selling underway now is historic, and worryingly for policymakers, it appears to be rooted in concern about the direction and credibility of US policymaking.

There’s almost nothing that could undermine credibility in a country’s economic policymaking – and its currency – more than forcibly removing the head of the central bank: Even in the United States and even the dollar. Or perhaps, especially in the US and especially the dollar, because of the outsized role both play in the global financial system.

Former Boston Fed President Eric Rosengren put in plainly on Monday when he wrote on the social media platform X: “Unless the goal is to make the US trade like a third-world country, threatening federal reserve independence only makes the US less attractive to foreign investors.”

POLYMARKET ODDS

Of course, the doomsday scenario may be avoided. Trump could back down or soften his stance, Powell might decide to voluntarily step down to limit the damage, or markets could take the view that his replacement may not be so bad after all. But right now, there’s little to suggest any of those scenarios will play out.

In the near term, Powell’s exit would probably prompt an immediate, dovish repricing of the Fed’s rate outlook.

Traders currently expect the Fed to cut interest rates by 100 basis points this year to 3.25-3.50%, but that’s with Powell attempting to balance growth concerns with any rising price pressures. A Fed more in tune with Trump’s thinking would tilt that balance in the direction of more easing.

But that’s only part of the story because continued dollar weakness wouldn’t be welcomed by other countries, whose currencies would be rising in value against the greenback. Moreover, shattered faith in the dollar would risk unleashing tremors that could rip through global markets in unexpected ways. Official intervention would surely come at some point.

But would it succeed?

“Fending off a speculative attack (on the dollar) would be challenging,” warns economist Phil Suttle, even for the Fed, as US rates would probably be falling in such a fevered “risk off” environment.

Redrawing the world’s economic architecture is one of Trump’s economic goals. Political interference in the central bank, unmooring inflation expectations and torpedoing the world’s faith in the dollar would certainly do that, but it’s a high price to pay.

Online prediction market Polymarket is currently attaching a 19% chance to Powell getting fired by the end of this year, up from around 15%, where it has hovered for most of this year, but down from as high as 23% last week. Unless Trump has a sudden change of heart, this probability – and pressure on the dollar – is likely to rise.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Aurora Ellis)

Dollar weakens on concerns about Fed’s independence under Trump

SINGAPORE – The dollar tumbled on Monday as investor confidence in the US economy took another hit over President Donald Trump’s plans to shake up the Federal Reserve, which would throw into question the independence of the central bank.

White House economic adviser Kevin Hassett said on Friday that the president and his team were continuing to study whether they could fire Fed Chair Jerome Powell, just a day after Trump said Powell’s termination “cannot come fast enough” as he called for the Fed to cut interest rates.

The dollar sank to a three-year low against the euro, hit a seven-month trough on the yen and slid 0.9% against the Swiss franc early in the Asian session on Monday, as an ongoing crisis of confidence in the greenback continued to play out.

Trading was thinned with markets in Australia and Hong Kong closed for Easter Monday. Most markets globally were closed on Friday for a holiday.

“Powell does not report directly to Trump, so (Trump) cannot actually fire him. He can only be removed from office under certain procedures which one would think have a higher barrier… but can the president move the cogs and wheels to undermine the perceived independence of the Fed? Sure, he could,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho.

“I would argue that they don’t even need to sack Powell immediately. You just need to create the perception that you could fundamentally change the view of an independent Fed.”

The euro scaled a three-year top of USD 1.1476, while the dollar last traded 0.58% lower at JPY 141.40.

The sterling peaked at USD 1.3339, its highest since October 1, while the Australian dollar hit a two-month top of USD 0.6396.

“It’s really a buffet for any dollar bear… from the heightened uncertainty around the self-harm from tariffs to the loss of faith even prior to the Powell news,” Varathan said.

Against a basket of currencies, the dollar slid to a three-year low of 98.623 on Monday.

The greenback was down 0.9% against the Swiss franc at 0.8119, while the New Zealand dollar rose 0.46% to USD 0.5964.

Elsewhere, the offshore yuan was up roughly 0.1% at 7.2966 per dollar.

China is widely expected to leave its benchmark lending rates unchanged at the monthly fixing later on Monday, but markets are wagering on more stimulus being rolled out soon in the face of an escalating Sino-US trade war.

(Reporting by Rae Wee; Editing by Jamie Freed)

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