A glance at the day ahead in global and European markets, by Ankur Banerjee (Morning Bid)
Investor sentiment, which had started to recover following the Israel-Iran ceasefire, was jolted once again after former US President Donald Trump launched a fresh attack on Federal Reserve Chair Jerome Powell. The latest outburst has revived fears about the Fed’s independence and added to a wave of dollar selling.
Dollar Weakens as Powell Comes Under Fire
Trump announced that he is considering replacing Powell as early as September, sparking concerns about the central bank’s autonomy until the end of the Fed chair’s term in May. The remarks weakened the dollar, sending the euro to its highest level since November 2021 and the Swiss franc to its strongest point in a decade.
The Wall Street Journal reported that Trump has “toyed” with the idea of naming Powell’s successor soon, a move that could complicate the Fed’s policymaking. Trump criticized Powell as “terrible” and hinted he might have three or four candidates in mind for the role.
Impact on the U.S. Dollar and Trade Policy
The dollar index, which measures the currency against six major peers, has fallen 10% this year — marking its longest slide in years, and extending its streak of monthly losses for the sixth straight month, a trend not seen since 2017.
While hopes of a weaker dollar had ebbed recently as U.S. stock markets surged to record highs, concerns resurfaced amid fresh questions about Trump’s tariff policies. Investors worry about the long-term effects of Trump’s approach to global trade, especially as the deadline for a new agreement looms on July 9.
Market Outlook
Thursday’s Asian session hinted at a muted open for European markets. Attention is expected to turn towards defence stocks after NATO leaders announced a landmark agreement to ramp up military spending in response to Trump’s demands (Morning Bid).
Meanwhile, in corporate news, Shell (SHEL.L) has denied reports of pursuing a takeover of British rival BP (BP.L), countering speculation from The Wall Street Journal that the oil giants were in early merger talks.
Source: Reuters
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