Trump’s Tension with Powell Affects USD

Yesterday afternoon brought yet another wave of excitement. Initially, a significant U.S. media outlet revealed that Donald Trump had informed Republican lawmakers about his intention to fire Federal Reserve Chairman Jerome Powell. Shortly after, Bloomberg referenced an unnamed official from the White House, claiming that Powell’s dismissal was on the horizon. Other reports indicated that Trump had submitted a draft termination letter earlier in the week. These developments represented a notable escalation in tensions. Michael Pfister, a foreign exchange analyst at Commerzbank, noted that this news led to a marked decline in the U.S. dollar, with the EUR/USD pair climbing back above the 1.17 threshold.

Trump’s Push Against Powell and Impact on the Dollar

Yet, as has become typical in recent times, the thrill was short-lived. Just before 6 PM German time, a denial emerged, with Trump clarifying that he did not intend to fire Powell after all.

It seems Trump is exploring how far he can push the boundaries of Federal Reserve independence. He has criticized escalating tensions to Republican lawmakers while portraying himself as “more conservative.” However, he continues to act in ways that undermine Powell’s position, refraining from outright rejection of him while emphasizing his preference for candidates who champion “low interest rates.”

Another development worth mentioning is Trump’s renewed focus on tariffs. He announced plans to impose a 10 or 15% tariff on goods from the remaining 150 countries that have yet to receive notification.