Dollar Surges as Trump Backs Off Fed Chair Threat

The U.S. dollar climbed against major currencies after President Trump eased off his threats to fire Federal Reserve Chair Jerome Powell. Traders were relieved as Trump's position on Powell softened and hints of reduced U.S.-China trade tensions emerged. The dollar performed strongly across the board.

The U.S. dollar surged against major world currencies on Wednesday, following President Trump's retraction of his implied threats to dismiss Federal Reserve Chair Jerome Powell. This reassurance brought stability to markets uneasy over the Fed's independence after Trump's criticisms of Powell's rate decisions since January.

With Trump expressing no intention of removing Powell from the role, the dollar rose 0.75% versus the yen and 0.7% against the Swiss franc, trading significantly higher during Asian sessions. Concurrently, eased U.S.-China trade tensions, suggested by comments from Trump and Treasury Secretary Scott Bessent, contributed to elevating market morale.

Investors responded positively, anticipating that Trump's softened stance could stave off policy disruptions. Chris Weston from Pepperstone highlighted how Trump's approach to Powell helps mitigate fears of drastic policy errors. As discussions continue, hopes are riding high on a trade agreement that could greatly reduce tariffs between the U.S. and China.

(With inputs from agencies.)