Dollar Pares Drop as Trump Denies Plans on Powell
A dollar gauge curbed its losses after President Donald Trump denied he is seeking to remove Federal Reserve Chair Jerome Powell. Markets were briefly turned upside-down on Wednesday after a White House official said the president was likely to soon remove Powell.
The Bloomberg Dollar Spot Index trades 0.3% lower after declining as much as 0.7%.
“Removal of Powell would significantly boost dollar risk premia, meaning weaker dollar, higher yields and steeper curve, by threatening inflation stability,” said Aroop Chatterjee, a strategist at Wells Fargo.
If Trump were to fire Powell, the dollar gauge can fall about 3% on that day, Chatterjee estimated.
“Testing the waters was my first thought,” Viraj Patel, strategist at Vanda Research, said when media started reporting on Trump seeking to oust Powell.
US wholesale inflation moderated in June as a sharp decline in the costs of travel-related services blunted a pickup in goods prices.
US economic activity “increased slightly” between late May and early July, the Federal Reserve said in its Beige Book.
USD/JPY fell 0.7% to 147.85.
The Japanese yen and euro were among best performers in the Group of 10 Wednesday.
EUR/USD rose 0.3% to 1.1639.
GBP/USD climbs 0.3% to 1.3420; data showed UK inflation unexpectedly rose in June to its highest level since January 2024.
Nearly all currencies in the Group of 10 gained against the greenback, with the yen outperforming.
Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly.
Source: Bloomberg
