US dollar hits fresh lows on report Trump considers naming next Fed chief early

SYDNEY – The US dollar fell to a fresh 3½-year low on the euro on June 26 as concerns about the future independence of the US Federal Reserve undermined faith in the soundness of the country’s monetary policy.

According to a Wall Street Journal report, US President Donald Trump had toyed with the idea of selecting and announcing Federal Reserve chairman Jerome Powell’s replacement by September or October, aiming to undermine his position.

Mr Trump on June 25 called Mr Powell “terrible” for not lowering interest rates sharply, while the Fed chair was telling the Senate that policy had to be cautious as the US President’s tariff plans were a risk to inflation.

“Markets are likely to bristle at any early move to name Powell’s successor, particularly if the decision appears politically motivated,” said Mr Kieran Williams, head of Asia FX at InTouch Capital Markets.

“The move would raise questions about the potential erosion of Fed independence and potentially weaken credibility,” he added. “If this was the case, it could recalibrate rate expectations, trigger reassessment of dollar positioning.”

Markets have nudged up the chance of a rate cut at the Fed’s next meeting in July to 25 per cent, from just 12 per cent a week ago, and are pricing in 64 basis points of cuts by the year end, up from around 46 basis points on Feb 20.

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