Dollar hits three-year low as Trump’s attacks on Powell worry investors
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The US dollar has sunk to a three-year low as the exodus from US assets gathers pace.
Traders are anxious after Donald Trump launched another blistering attack on America’s top central banker yesterday, calling Jerome Powell “Mr. Too Late” and “a major loser”, as the US president intensified his calls for US interest rate cuts.
This has pushed the dollar down against a basket of currencies to its lowest level since March 2022.
Against the yen, the dollar has hit a seven month low, trading at ¥140 for the first time since last September.
Last week, Trump posted that “Powell’s termination cannot come fast enough”.
Tony Sycamore, market analyst at IG, says Trump’s attacks on Powell are leading to a lack of confidence in the markets:
Their relationship has long been contentious. Despite appointing Powell in 2017, Trump has since expressed regret, criticising Powell for “bad decisions” and being “always too late and wrong.”
Powell has countered by warning that Trump’s tariffs could spur higher inflation and slower growth, contradicting Trump’s claims of his policies’ economic benefits.
Yesterday (when European markets were closed), there were further losses on Wall Street, where the Dow Jones Industrial Average lost another 2.5%, or almost 1,000 points.
Investors are also disappointed at the lack of progress in trade talks, following the hefty tariffs announced by Trump earlier this month.
This is creating a worrying situation, in which the dollar, the US stock markets and US government bond prices are all falling. Typically in a crisis, US government debt and the dollar would rally as traders sought out a safe haven.
“The market reaction is arguably more about broader investor concerns that less credible US policy-making may erode the exorbitant privilege that has allowed the US to run high twin deficits than it is about the specific risk of political influence over the Fed’s rates policy,” explains Jim Reid, market strategist at Deutsche Bank.
The International Monetary Fund (IMF) will give its verdict on the economic consequences of the US trade war later today, when it releases the latest forecasts in its World Economic Outlook.
Central bank governors, finance ministers, and other economic leaders are heading to Washington for the annual IMF-World Bank Spring Meetings.
The agenda
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9am BST: ECB Survey of Professional Forecasters
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2pm BST: International Monetary Fund releases its latest World Economic Outlook.
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3pm BST: European Union Consumer Confidence report
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3.15pm: IMF releases its Global Financial Stability Report
Key events
Dario Perkins, economist at City firm TS Lombard, makes an excellent point – if Jerome Powell is forced out by Donald Trump, who would want to slide into the Fed chair’s shoes?
Seriously, given the overt pressure coming from this administration, who would want to be the next Fed chair anyway? In these circumstances, you have to be pretty suspicious of WHOEVER takes on the job next year…
— Dario Perkins (@darioperkins) April 22, 2025