US dollar slides as Fed independence comes under threat from Trump

Singapore – The US dollar’s slide gathered momentum on April 21 after US President Donald Trump contemplated whether he is

able to fire Federal Reserve chairman Jerome Powell,

a move that has great consequence for the central bank’s independence and for global markets.

Mr Trump launched a series of public attacks against the Fed chief on April 17. Mr Powell’s potential removal is likely to erode investor confidence as the US central bank’s independence is seen as a key reason for investing in US assets.

The dollar weakened against almost every major currency amid holiday-thinned trading in Asia as investors weighed the risk of Mr Powell’s dismissal and how that may further dent sentiment towards US assets. 

The dollar tumbled 1.3 per cent to a decade low of 0.8062 against the safe-haven Swiss franc. The greenback also slid 1.3 per cent against the euro, and 1.1 per cent against the Japanese yen.

Against the Singapore currency, the dollar fell 0.7 per cent to 1.3021 as at 4.21pm Singapore time. The US currency has weakened about 3.4 per cent against its Singapore counterpart to date in 2025.

Gold prices surged over 1 per cent to touch a new high of US$3,370.17 per ounce, taking its gains so far in 2025 to 26 per cent. In New York, S&P 500 futures fell 0.64 per cent, and Nasdaq futures dropped 0.53 per cent.

“Markets are already on edge due to escalating geopolitical tensions, and now, concerns are rising that Trump’s potential interference with the Fed could add another layer of uncertainty,” said Ms Charu Chanana, chief investment strategist at Saxo in Singapore.

“Any signs of political pressure on monetary policy could undermine the Fed’s independence and complicate the path ahead for interest rates, just as investors are looking for stability amid global volatility.”

Mr Trump’s tariffs have roiled financial markets and triggered a violent sell-off in Treasuries and the dollar that casts fresh doubt on the long-held belief in the safe-haven status of US assets. However, he may accept, in part, some weakness in the dollar, given that he had previously said he would welcome a cheaper currency because it would make the nation’s products more competitive. 

Chicago Federal Reserve president Austan Goolsbee said on April 20 that he hopes the US is not moving to an environment where the ability of the central bank to set monetary policy independent of political pressure is questioned.

Mr Win Thin, global head of markets strategy at Brown Brothers Harriman, wrote in a note: “We believe dollar weakness will continue. The attack on Fed independence is intensifying.

“The admission that this is being studied at all should be taken very seriously and very negatively.” BLOOMBERG, REUTERS