Trump's Alleged Successor Announcement Sends Dollar Plummeting, Boosts Euro
Trump's verbal attacks on Powell lead to a decrease in the US dollar's value and a corresponding increase in the euro's worth.
In an unexpected turn of events, the common currency, the euro, is trading at its best in years, surpassing $1.17 on Thursday. While it retraced some of its early gains later in the day, the euro still managed to maintain its strong position, breaking the $1.17 barrier.
This uptick can be attributed to a weak US dollar, as currency markets are abuzz with speculation that the US Federal Reserve might slash interest rates sooner than anticipated. With the looming prospect of lower rates, the dollar has been experiencing unprecedented pressure against other significant currencies, while the euro has been soaring.
The chatter in markets stems from a report by the Wall Street Journal suggesting that US President Donald Trump could name Jerome Powell's successor as early as September or October, despite Powell's term extending until May 2026. Trump, known for his consistent criticisms of the incumbent Fed chair, has been demanding lower interest rates.
Analysts like Michael Pfister from Commerzbank warn of a potential "shadow Fed chair" if Trump were to make an early appointment. This scenario poses a risk that Powell may become a "lame duck" in his final months as Fed chair. An appointment made ahead of schedule might also raise questions about the Federal Reserve's independence and potentially compromise its credibility, according to Kieran Williams from InTouch Capital Markets.
However, it's crucial to note that as of now, there's no official announcement from Trump regarding a successor for Powell. Potential candidates include Kevin Warsh, Kevin Hassett, Scott Bessent, David Malpass, and Christopher Waller, according to reports. The exact impact of this speculation and potential early announcement on the US Dollar and Euro remains uncertain due to a lack of specific data and analysis.
Sources: ntv.de, jog/dpa/rts, Wall Street Journal, unconfirmed reports
The speculation about an early successor announcement for Jerome Powell, potentially compromising the Federal Reserve's independence, could lead to increased scrutiny of community policies related to monetary union, economics, and politics. The impending uncertainty in finance, brought about by this news, may significantly influence business and general-news discussions about the European economic and monetary union, especially as it relates to the euro and the US dollar.
