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Trump’s Push Against Powell Fuels Doubts About US’s Haven Status

Ruth Carson and David Finnerty

Mon, Apr 21, 2025, 4:47 AM 5 min read

The dollar and US stock futures dropped while 10-year Treasury yields climbed as investors weighed the risk of Powell’s dismissal and its implications for the world’s largest economy. The selling intensified after National Economic Council Director Kevin Hassett said Friday that Trump was studying the matter, after a report said the president was exploring such a move.

While legal scholars say that a president can’t dismiss a Fed chair easily, and Powell has said he wouldn’t resign if asked by Trump, the speculation is dealing US assets a fresh blow. Washington’s aggressive trade tariffs have already fanned fears of a recession and fueled doubts about the status of Treasuries as the haven of choice.

“If the credibility of the Fed is called into question, it could severely erode confidence in the dollar,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. in Singapore.

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Trump has said a cheaper currency would make the nation’s products more competitive, adding to the pressure on the dollar.

The Bloomberg Dollar Spot Index fell as much as 1% Monday to the lowest level since December 2023. The yen strengthened to a level last seen in September, while the euro rallied to the highest in more than three years.

The shared currency is now trading at around $1.15, close to the most bullish year-end forecasts from strategists. The yen, at around 140.50 per dollar, is stronger than the median year-end target of 143, Bloomberg data shows.

“We believe dollar weakness will continue,” Win Thin, global head of markets strategy at Brown Brothers Harriman & Co., wrote in a note. “The attack on Fed independence is intensifying. The admission that this is being studied at all should be taken very seriously and very negatively.”

Several hedge funds were among those selling the dollar on Monday after Hassett’s remarks, according to traders familiar with the transactions, who asked not to be identified because they aren’t authorized to speak publicly.

Hedge funds are now the least bullish on the greenback since October, Commodity Futures Trading Commission aggregated data showed. While headlines on Powell are certainly not helping sentiment, others say the worsening global trade war will likely continue to be the dominant driver on dollar trading.

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