The US currency accelerated losses after Thailand’s prime minister said trade negotiations with Washington – scheduled to begin tomorrow, would be postponed.
The dollar sagged close to the decade-low reached the previous day against the Swiss franc, and edged back towards a 3-1/2-year trough versus the euro.
Trump ramped up his criticism of Fed chief Jerome Powell yesterday in a Truth Social post, calling him a “major loser” and demanding that he lower interest rates “NOW” or risk an economic slowdown.
On Friday, White House economic adviser Kevin Hassett said the president and his team were continuing to study whether they could fire Powell, a day after Trump said Powell’s termination “cannot come fast enough”.
Trump’s onslaught comes after Powell last week said the central bank can afford to be patient in judging how to set policy, and that rates should not be lowered until it is clearer that US tariffs won’t stoke persistently higher inflation.
“There’s this terrible stalemate there, and concern that there will be some sort of action taken to replace Powell, which would create a real panic in the dollar,” said Eric Kuby, CIO at North Star Investment Management.
Moreover, on the trade front, “every day that there are no deals struck to provide any relief, it creates continued anxiety” that Trump’s policies will continue in their current form, which would be “destructive for the economy”, Kuby said.
Yesterday, China accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the US at its expense, ratcheting up the trade war between the world’s two biggest economies.
The dollar sank as much as 0.6% to touch the key psychological 140 yen level for the first time since mid-September.
The US currency eased 0.1% to 0.8082 Swiss franc, not far from the decade-low 0.8042 reached in the previous session.
The euro was little changed at US$1.1535, after jumping to US$1.1573 yesterday for the first time since November 2021.
Sterling gained 0.25% to US$1.3412 after surging as high as US$1.3421 for the first time since September to start the week.
Even the risk-sensitive Australian dollar climbed to a fresh four-month peak of US$0.64385.
“The longer the speculation about the independence of US monetary policy continues, the longer the US dollar is at risk of falling,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
“It may take another sell‑off in the US government bond market or US equity market to encourage president Trump to refrain from such comments,” Capurso said.
The US dollar index measure against six major peers declined to 98.117, after sinking as low as 97.923 in the previous session, a level not seen since March 2022.