The dollar weakened against its major peers with euro among the outperformers. The yen climbed to the strongest level against the greenback since September. Treasuries dropped and equity-index futures for the S&P 500 and the Nasdaq 100 retreated. Japanese stocks fell at the open.
The declines in US assets indicate that the once-popular America-first trade – buying assets that win when the US outperforms – is reversing after Trump ratcheted up levies, roiling the Treasuries market and wiping off trillions from global stocks. Last week, the president — frustrated that the central bank hasn’t moved to lower interest rates — posted on social media that Fed Chairman Jerome Powell’s “termination cannot come fast enough!”
“We believe dollar weakness will continue,” Win Thin, global head of markets strategy at Brown Brothers Harriman & Co., wrote in a note. “The attack on Fed independence is intensifying. The admission that this is being studied at all should be taken very seriously and very negatively.”
The Bloomberg Dollar Spot Index dropped 0.5%, extending last week’s 0.7% decline.
US equities posted a weekly loss amid disappointment over the Fed’s pushback on the idea of the central bank supporting markets. Trump criticized Powell on social media and later told reporters he could force Powell out if he wanted to. The president hasn’t clarified whether that means he intends to find a way to fire the Fed chief, or is simply eager for Powell’s term to end as scheduled in May 2026.Fed Chicago President Austan Goolsbee warned against efforts to curtail the central bank’s independence, days after Trump expressed his displeasure with Powell.“There’s virtual unanimity among economists that monetary independence from political interference — that the Fed or any central bank be able to do the job that it needs to do — is really important,” Goolsbee said on CBS’s Face the Nation on Sunday.
Trump would put the credibility of the dollar on the line and destabilize the US economy if he fired Powell, French Finance Minister Eric Lombard warned.
Meanwhile, Fed San Francisco President Mary Daly said the US central bank may hold interest rates longer than anticipated due to inflation risks, but could yet cut later this year.
In a sign that investors are rotating investments away from the US, Deutsche Bank AG said that Chinese clients have reduced some of their Treasuries holdings in favor of European debt. European high-quality bonds, Japanese government bonds and gold are likely to be the potential choices for investors as alternatives to Treasuries, said Lillian Tao, head of China macro and global emerging market sales at the bank.
This week, purchasing manager indexes from Japan to Europe to the US will offer the first coordinated glimpse of manufacturing and services activity since Trump’s global tariffs — now partly on hold — were unleashed on April 2. Business surveys from major economies are also on the calendar.
US company earnings also continues, with Tesla Inc. and Alphabet Inc. the first of the so-called “Magnificent Seven” due to report this week.
In commodities, oil retreated as traders fretted about the impact of the US-led trade war on energy demand and gold rose toward a record.
