US dollar hits three-year nadir
The US dollar fell to three-year lows after reports that US President Donald Trump is considering nominating Fed Chair Jerome Powell’s successor early as a way to undermine him.
The dollar is down 0.6% against a basket of major rivals, hitting early 2022 lows.
The dollar continues to sustain heavy losses this year as investors lose confidence in the US dollar due to Trump’s trade wars and the government’s yawning budget deficit.
Trump Versus Powell
Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.
Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.
Powell warned that while Trump’s tariffs could cause a one-time hike in prices, the risk of sustained inflation is big enough to force the Fed into more caution about rate cuts.
The Wall Street Journal reports that Trump is considering choosing and announcing his successor by September or October as a way to undermine him.
Euro and Sterling Surge
The euro is up 0.7% today against the greenback to $1.174, the best since September 2021, after NATO allies vowed to raise defense spending to 5% of total GDP by 2035.
Sterling also rallied by a similar percentage to $1.376.
The dollar index is down 10% so far this year, but it faces even more pressures as the Federal Reserve gears up towards multiple interest rate cuts this year.
Fed official Michelle Bowman said on Monday that the time for an interest rate cut is approaching amid potential risks to the labor market.
The odds of a Fed 0.25% rate cut at the July meeting rose from 15% to 23% according to the Fedwatch tool.
The odds of a Fed September rate cut rose from 68% to 78%.
The bonds market is mostly stable, with two-year US treasury yields down 0.01% to 3.77%.
Gold keeps recovering as Trump skewers Powell
Gold prices rose in European trade on Thursday on track for the second straight profit away from recent two-week lows as the US dollar swoons against major rivals.
It comes amid renewed concerns about the independence of the Federal Reserve after renewed attacks by US President Donald Trump against Fed Chair Jerome Powell.
Prices
Gold prices rose 0.35% today to $3343 an ounce, with a session-low at $3329.
On Wednesday, gold rose 0.25%, the first profit in four days away from a two-week trough at $3295.
US Dollar
The dollar index fell 0.45% on Thursday, sharpening losses for the fourth straight session and plumbing three-year lows at 97.27 against a basket of major rivals.
A weaker dollar makes the greenback-denominated gold futures cheaper to holders of other currencies.
Trump attacks Powell
Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.
Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.
Powell warned that while Trump’s tariffs could cause a one-time hike in prices, the risk of sustained inflation is big enough to force the Fed into more caution about rate cuts.
The Wall Street Journal reports that Trump is considering choosing and announcing his successor by September or October as a way to undermine him.
US Rates
Fed official Michelle Bowman said on Monday that the time for an interest rate cut is approaching amid potential risks to the labor market.
The odds of a Fed 0.25% rate cut at the July meeting rose from 15% to 23% according to the Fedwatch tool.
The odds of a Fed September rate cut rose from 68% to 78%.
SPDR
Gold holdings at the SPDR Gold Trust fell by 2.29 tons yesterday to a total of 953.39 tons.
Euro extends gains to four-year peak on strong demand
The euro rose in European trade on Thursday against a basket of major rivals, expanding gains for the sixth straight session against the US dollar and hitting a four-year high, and surpassing the $1.17 barrier for the first time since 2021 on strong demand.
It comes amid renewed concerns about the independence of the Federal Reserve after renewed attacks by US President Donald Trump against Fed Chair Jerome Powell.
The odds of an ECB interest rate cut in July also dropped as traders await more clues on the future path of policy easing in Europe this year.
The Price
The EUR/USD price rose 0.5% today to $1.1717, the highest since 2021, with a session-low at $1.1653.
The euro closed up 0.45% on Wednesday, the fifth daily profit in a row, and the longest such streak of daily gains in 2025 following the Iran-Israel ceasefire.
The Dollar
The dollar index fell 0.45% on Thursday and expanded the losses for the fourth straight session, plumbing three-year lows at 97.27 against a basket of major rivals.
The decline comes amid renewed concerns about US financial stability as Trump attacks Powell once more.
Trump attacks Powell
Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.
Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.
The Wall Street Journal reports that Trump is considering choosing and announcing his successor by September or October as a way to undermine him.
European Rates
ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.
According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.
The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues.
Yen rises as Trump attacks Powell once again
The yen rose in Asian trade on Thursday against a basket of major rivals, resuming gains against the US dollar and approaching a two-week high as the greenback suffers.
The dollar skidded to three-year lows on renewed concerns about US financial and monetary stability after renewed attacks by President Trump on Fed Chair Jerome Powell.
The latest Bank of Japan’s policy meeting also tanked the odds of an interest rate hike in July, with traders now awaiting more data to gather clues.
The Price
The USD/JPY price fell 0.4% today to 144.57, with a session-high at 145.26.
The yen lost 0.2% on Wednesday against the dollar after a 0.85% surge in the previous session away from six-week lows at 148.03.
The Dollar
The dollar index fell 0.45% on Thursday on track for the fourth straight loss, plumbing three-year lows at 97.27 against a basket of major rivals.
The decline comes as the US dollar faces accelerating selloff waves due to concerns about financial stability.
Trump Attacks Powell
Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.
Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.
The Wall Street Journal reports that Trump is considering choosing and announcing his successor by September or October as a way to undermine him.
Japanese Rates
The odds of a Bank of Japan’s 0.25% interest rate hike at the July meeting stood at just 40%.
Traders now await important Tokyo data on inflation, unemployment, and retail sales to gather additional clues.