Dollar slides as Fed independence under threat from Trump
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
Highlights:
- Dollar falls sharply across the board
- Trump looking into ways to axe Federal Reserve Chair Powell
- Swiss franc hits decade high, euro rises above $1.15
- European markets closed for Easter Monday
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.
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The dollar sank to a decade-low against the Swiss franc , the euro broke above $1.15 while the New Zealand dollar reclaimed the $0.6000 level for the first time in more than five months.
Trading was thinned 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.
"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," Varathan added. "You just need to create the perception that you could fundamentally change the view of an independent Fed."
Against the Swiss franc , the dollar sank more than 1% to a 10-year trough of 0.80695, while the euro peaked at $1.153525, its highest since November 2021.
The dollar also hit a seven-month low of 140.615 yen . CFTC data showed net-long positions on the Japanese yen hit a record high for the week ended April 15.
Sterling rose to its highest since September at $1.3395, while the Australian dollar scaled a four-month high of $0.6430.
"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.
Against a basket of currencies, the dollar slid to a three-year low of 98.164 on Monday. The New Zealand dollar jumped more than 1% to $0.6013.
Elsewhere, the onshore yuan rose to a two-week high before paring some of those gains to last stand at 7.2904 per dollar. Its offshore counterpart similarly touched a one-week top of 7.2835 per dollar.
China on Monday kept its benchmark lending rates steady for the sixth successive month, matching expectations. But markets are wagering on more stimulus being rolled out soon in the face of an escalating Sino-US trade war.
