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Global Markets Tumble as Trump’s Fed Criticism Hits Dollar Confidence

President Donald Trump's public attacks on Fed Chair Jerome Powell and indications of naming a replacement ahead of schedule have rattled global markets. The US dollar dropped to a three-year low as the euro, Swiss franc, and yen surged. Experts warn this threatens the Fed's independence, risking economic confidence and fueling uncertainty in US monetary policy.

Global Markets Tumble as Trump’s Fed Criticism Hits Dollar Confidence

Trump’s Fed Criticism Shakes Global Markets

US President Donald Trump's recent attacks on Federal Reserve Chair Jerome Powell have unsettled international markets and dented faith in the US dollar, pushing it to its lowest level in over three years. Trump labeled Powell as "terrible" and indicated he might appoint a successor earlier than the traditional schedule, intensifying market anxiety.

Surprise Move on Federal Reserve Leadership

Traditionally, announcements regarding the Fed Chair's succession occur much closer to term endings. However, discussions suggest Trump may reveal Powell’s replacement as soon as September or October, despite Powell’s term ending next May. Trump claimed to have a shortlist of three to four candidates ready to take over, signaling an expedited transition.

Why Trump’s Criticism Matters

Since taking office, Trump has criticized Powell for not cutting interest rates quickly enough. The Fed, mindful of inflation risks heightened by trade tariffs, has tread cautiously. Experts warn that the President’s public assault on the Fed’s independence risks undermining confidence in the US economy, as central bank autonomy is fundamental to stable monetary policy and investor trust.

Market Reactions: Dollar Dips, Euro and Other Currencies Surge

The US dollar declined sharply against major currencies, with the euro soaring to its highest value against the dollar in over three years, reaching around $1.6805. The Swiss franc hit a ten-year peak, while the Japanese yen strengthened by 0.35% against the dollar, hitting 144.70. The pound sterling also gained significant ground.

Expert Insight on Fed Independence and Market Impact

Market analyst Tony Sycamore highlighted that Trump's potential appointee is expected to adopt a dovish stance, favoring lower interest rates aligned with the President's agenda. However, this could reignite concerns about the Fed's independence, shaking investor confidence in both the central bank and the US dollar.

"The Fed’s autonomy ensures decisions are grounded in economic data rather than political pressure," Sycamore explained. "Compromising that independence risks inflation and undermines trust in US monetary policy."

Why Central Bank Independence Is Vital

Central banks must operate free from political interference to make objective decisions that serve long-term economic stability. While populist politicians might favor aggressive rate cuts to stimulate growth, central banks balance these actions against risks like inflation. Trump’s moves have reignited a crucial debate over the role and independence of the Federal Reserve in steering the US and global economy.

Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility
Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility

Yields on Japan’s long-term government bonds have reached near-record highs, fueling fears of capital repatriation by Japanese investors from the U.S. and potential disruptions in global financial markets. Experts warn that rising yields and a strengthening yen could unwind the yen carry trade, impact U.S. equities, and tighten global liquidity conditions. While some foresee a gradual adjustment, the evolving bond market dynamics warrant vigilant observation given their broad economic implications.

Investors Skeptical of 'TACO' Trade Amid Trump's Tariff Policy Shifts
Investors Skeptical of 'TACO' Trade Amid Trump's Tariff Policy Shifts

The 'TACO' trade refers to President Trump's pattern of imposing tariffs only to later reduce or delay them, sparking market swings. Investors find it challenging to form confident positions amid shifting policies. Recent tariff announcements caused sharp equity sell-offs followed by rallies when tariffs were rolled back. Experts warn that relying on a guaranteed 'Trump put' is risky, as market skepticism grows and companies adjust by reshaping supply chains.

Bank of America Sees European Pharma as a Winner Amid Potential Trump Tariffs
Bank of America Sees European Pharma as a Winner Amid Potential Trump Tariffs

Bank of America identifies the European pharmaceutical sector as a key beneficiary if U.S. tariffs imposed by the Trump administration proceed. Despite recent declines due to tariff fears and other factors, valuations are at their lowest since 2009, suggesting an undervalued opportunity. Analysts also note potential gains in Swiss stocks amid concerns of a global economic slowdown, particularly in pharma and consumer sectors.

Investors Reevaluate US Exposure Amid Political Uncertainty and Market Shifts
Investors Reevaluate US Exposure Amid Political Uncertainty and Market Shifts

Amid growing political uncertainty and social unrest in the U.S., investors are rethinking their market exposure. Tariff policies, potential new taxes on foreign investments, and recent riots in Los Angeles contribute to cautious sentiment. Despite these challenges, the U.S. market remains resilient, while Europe gains appeal as a diversified alternative.

Global Investors Shift Focus: The Rise of the 'Anywhere But USA' Trade
Global Investors Shift Focus: The Rise of the 'Anywhere But USA' Trade

Concerns over U.S. economic policies, fiscal imbalances, and currency weakening are driving a shift in investor preference known as the 'Anywhere But USA' trade. Market experts highlight rising opportunities in Europe, emerging markets like India, and safe-haven assets in the UK. This global diversification reflects a broader recalibration toward balanced, multipolar growth amid increasing market volatility and geopolitical risks.

China's Central Bank Increases Gold Reserves for Seventh Consecutive Month
China's Central Bank Increases Gold Reserves for Seventh Consecutive Month

China's central bank continued its gold buying spree in May, marking the seventh consecutive month of accumulation. Gold reserves grew to 73.83 million fine troy ounces, valued at nearly $242 billion. Despite gold prices stabilizing after an April record high, China’s purchases reflect strategic diversification away from dollar assets. Globally, central banks are expected to buy 1,000 metric tons of gold in 2025, signaling sustained confidence in bullion as a reserve asset.

Apollo Plans $100 Billion Germany Investment as Investors Shift Toward Europe
Apollo Plans $100 Billion Germany Investment as Investors Shift Toward Europe

Apollo Global Management aims to invest $100 billion in Germany over the next decade, reflecting a broader trend of private capital redirecting from U.S. markets to Europe. Driven by Germany's political stability, infrastructure initiatives, and strong sectoral opportunities, investors are increasingly bullish on European markets with significant growth in private equity, credit, and real estate segments.

European Markets Edge Lower Despite Progress in U.S.-China Trade Talks
European Markets Edge Lower Despite Progress in U.S.-China Trade Talks

European stocks are expected to dip at opening hours even as the U.S. and China announce a tentative trade agreement. Inditex, Zara's parent company, posted quarterly revenues slightly below forecasts, citing a sluggish start to summer sales. Investors remain cautious ahead of U.S. inflation data and important corporate and economic events taking place today.

Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions
Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions

Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House, emphasizing that monetary policy decisions will continue to rely on objective economic analysis rather than political influence. The central bank reaffirmed its commitment to address inflation, growth, and employment based on incoming data. Despite Trump's calls for lower rates, the Fed maintains a cautious stance amid tariff uncertainties and expects to hold rates steady for the near term.

Trump Slams Fed Chair Powell, Predicts No Rate Cut at Upcoming Meeting
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Fed Chair Powell Holds Off on Rate Cuts Despite Trump’s Pressure
Fed Chair Powell Holds Off on Rate Cuts Despite Trump’s Pressure

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US Dollar Slumps to 3.5-Year Low Amid Fed Credibility Concerns and Tariff Impact
US Dollar Slumps to 3.5-Year Low Amid Fed Credibility Concerns and Tariff Impact

The US dollar fell to its lowest mark against the euro in over three years amid growing anxiety about the Federal Reserve's independence and trade tensions affecting economic growth. Speculation about replacing Fed Chair Jerome Powell has unsettled markets, boosting expectations for rate cuts. Meanwhile, JPMorgan warns that tariffs could slow growth and increase inflation risks, pushing recession odds to 40%. The euro and other safe havens strengthened as investors seek stability amid uncertainty.

US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure
US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure

Following a rare public statement, the US Federal Reserve has reaffirmed its non-partisan role in setting monetary policy. This comes after Chair Jerome Powell met with President Trump, who has been pressuring the Fed to reduce interest rates. The Fed emphasized that decisions will be made based on objective economic data, maintaining its independence despite political pressures.

Trump Rebukes Fed Chair Powell, Demands Sharp Interest Rate Cut
Trump Rebukes Fed Chair Powell, Demands Sharp Interest Rate Cut

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Trump Calls Fed Chair Powell 'Numbskull' and Hints at Firing Amid Interest Rate Dispute
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Donald Trump intensified his attacks on Federal Reserve Chair Jerome Powell, labeling him a "numbskull" and a "moron" for not lowering interest rates. Trump hinted at the possibility of firing Powell before his term ends next year, following the Fed's decision to hold rates steady amid inflation and tariff-driven economic challenges.

India Rejects SCO Statement Over Pahalgam Attack Omission and Balochistan Reference
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European Markets Mixed at Open Amid Ceasefire Talks and NATO Developments

European stock markets are opening with varied activity, reflecting investor caution amid geopolitical tensions and strategic NATO decisions. The London FTSE and Germany's DAX are expected to dip slightly, while France and Italy show steadier performances. Focus today includes H&M’s earnings and Germany's consumer confidence data, offering insight into regional economic sentiment.