Dollar Hits Three-Year Low: Fed Concerns and What’s Next
The Dollar’s Recent Decline
The dollar is falling. Investors worry about the Federal Reserve’s independence. This pushes the dollar to its lowest levels in over three years.
President Trump’s Comments Add Uncertainty
President Donald Trump criticized Federal Reserve Chair Jerome Powell. He called Powell “terrible” and hinted at potential replacements. This adds to the uncertainty.
How the Dollar is Performing
The dollar is down 10% this year. It’s the worst year for the dollar since 2003. On Thursday, the dollar hit multi-year lows against major currencies. It briefly recovered due to West Asia tensions earlier in the week.
What to Expect in the Future
Experts predict the dollar will weaken further. Here’s why:
- Worries about Fed independence
- Expectations for rate cuts
- Trade agreement deadline on July 9
Who Could Be the Next Fed Chief?
Potential candidates for the next Fed chief include:
- Kevin Warsh, former Fed governor
- Kevin Hassett, National Economic Council head
- Christopher Waller, current Fed governor
- Scott Bessent, Treasury Secretary
The Dollar’s Safe-Haven Role is Weakening
Seema Shah, a top strategist, noticed something important. The dollar didn’t benefit much from recent West Asia tensions. This suggests the dollar’s safe-haven role is weakening.
Usually, the dollar rises with oil prices. But last week, it only gained 0.7%.
Investors Worry About Fed Independence
Investors are concerned about the Fed’s independence. Respect for independent institutions like central banks is crucial. It helps maintain economic stability and policy certainty.
