US dollar fell for the second day in a row as President Donald Trump threatened to appoint a new Federal Reserve Chair, undermining Fed independence. The dollar has lost 10.48% of its value against other currencies this year, and investors fear lower interest rates and worse inflation.
Trump’s attacks on Fed Chair Jerome Powell have led to major outflows from bond markets, with investors fearing a new appointment could lead to rate-cutting cycles. However, US stocks remain resilient, with the S&P 500 near record highs.
The dollar declined by 0.55% this morning, and Trump’s recent posts on Truth Social have called Powell “very dumb” and “hardheaded.” A report by Wall Street Journal suggests that Trump may fast-track the appointment of a new Fed Chair as soon as September, further undermining Powell.
Investors are nervous that US monetary policy might fall into the hands of someone who doesn’t understand inflation, leading to an extraordinary conflict between the Fed chair and the Federal Open Markets Committee. The bond market is also feeling the pressure, with net outflows from long-dated US bonds reaching $11 billion in Q2.
Despite this, stocks continue to rise, with S&P 500 futures trading up 0.36% at the time of writing.
Source: https://fortune.com/2025/06/26/trump-fed-powell-us-dollar