Dollar Decline Raises Concerns on Its Future Reserve Status
On Monday, the U.S. dollar plunged to its lowest level in three years, as escalating friction between President Donald Trump and Federal Reserve Chairman Jerome Powell rattled global investors and weakened confidence in the American economy.
Stay Ahead of the Market:
Discover outperforming stocks and invest smarter with Top Smart Score Stocks.
Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener.
Against a basket of major currencies, the ICE U.S. Dollar Index slumped to 97.923, a level not seen since March 2022. The euro climbed above $1.15, while the dollar hit a decade-low against the Swiss franc and a seven-month low against the Japanese yen.
Testing the Dollar's Reserve Status
The recent decline in the U.S. dollar has sparked concerns among market participants. There is a growing apprehension that the drop reflects a deeper investment unease as President Trump attempts to modify global trade dynamics. The dollar's long-standing dominance in international trade benefits from low U.S. borrowing costs and amplifies American geopolitical influence. Economists warn that this trust, built over decades, could be swiftly undermined.
Financial institutions like Deutsche Bank and Capital Economics have highlighted the growing 'confidence crisis' and questioned the dollar's future reserve status. The implications are not just for financial markets but could reflect broader geopolitical shifts if trust in the dollar's reliability as a safe-haven currency continues to weaken.
What's Driving the Decline?
President Trump intensified his criticism of Powell on Monday through social media, labeling the Fed chair a 'major loser' and demanding immediate interest rate cuts. This followed earlier comments where Trump stated Powell's termination 'cannot come fast enough.'
The situation grew more concerning for markets after White House economic adviser Kevin Hassett confirmed that the administration was exploring whether they could remove Powell from his position—an unprecedented move that would challenge the central bank's independence.
Economists warn that undermining the Federal Reserve's independence could have serious consequences, particularly if the central bank's mandate becomes politicized, as policymakers might struggle to control inflation effectively.
The dollar's weakness extends beyond the Fed controversy. Trump's sweeping tariffs and unpredictable trade policies have darkened the outlook for the U.S. economy, leading investors to pull money out of American assets. Implementing global reciprocal tariffs appears to have triggered the latest bout of dollar selling.
Impact on Markets
Markets reflected this uncertainty, with all three major indexes dropping more than 2% on Monday. The tech-heavy Nasdaq was hit particularly hard, dragged down by steep losses in the 'Magnificent Seven' megacap growth stocks.
Trading was relatively thin on Monday, with many global markets closed for Easter Monday holidays.
Other currencies benefiting from the dollar's slide include the British pound, which rose to its highest level since September at $1.34, and the Australian dollar, which reached a four-month high. The New Zealand dollar also reclaimed the $0.60 level for the first time in over five months.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
32 minutes ago
- Yahoo
Fox Business Host Presses Trump's Labor Secretary: How Come We're Losing Manufacturing Jobs When There's A Big Push To Bring Them To The U.S.
Despite President Donald Trump's frequent promises to boost manufacturing in America, recent job figures show troubling declines. In a recent Fox Business segment, host Stuart Varney pressed Labor Secretary Lori Chavez-DeRemer over the loss of 8,000 manufacturing jobs in May, asking directly, 'How come we're losing 8,000 manufacturing jobs in May when there's a big push to bring manufacturing jobs back to America?' Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to Chavez-DeRemer pointed out general improvements in the economy, saying, 'We're certainly holding steady, and under the Trump administration, manufacturing jobs are still up over what the last administration, under Biden, had.' She emphasized ongoing efforts to expand the sector through construction and healthcare employment, alongside new manufacturing plants. Yet, she admitted, 'It will take some time.' Varney challenged Chavez-DeRemer repeatedly, pointing out the contradiction between the administration's push to revive manufacturing and the actual job losses reported. Chavez-DeRemer attributed the setbacks partially to the transitional effects of Trump's tariff policies aimed at leveling the playing field internationally. 'The president has done a wonderful job in negotiating the level playing field,' Chavez-DeRemer argued. 'We're seeing tens of trillions of dollars being reinvested here in the United States, and I'll continue to focus on that skilled workforce as those manufacturing jobs continue to grow.' Trending: Invest where it hurts — and help millions heal:. Despite Chavez-DeRemer's assurances, industry figures reflect broader concerns. According to the Bureau of Labor Statistics, employers added only 139,000 jobs overall in May, marking a noticeable slowdown. Factory managers have expressed unease about Trump's tariffs in the Institute for Supply Management's May survey, describing them as a significant burden for manufacturing businesses, with one manager noting that the current 'chaos does not bode well for anyone.' Recent economic reports support this caution, highlighting the significant role manufacturing plays in the U.S. economy. As of late 2024, manufacturing contributed almost $3 trillion to the economy and supported millions of jobs directly and indirectly. Yet, despite these promising figures, the manufacturing sector continues to shed automation and artificial intelligence rapidly transforming the job landscape, Varney asked Chavez-DeRemer about predictions that AI could eliminate half of all entry-level white-collar jobs within five years. Chavez-DeRemer downplayed the threat, saying, 'I believe that we're going to streamline and we're going to assist the American worker. Things are changing at a rapid pace, but AI is not going anywhere.' She added that the administration is proactively training workers for this shift, dedicating 10% of apprenticeship grants to AI training. For now, manufacturing in the U.S. faces significant headwinds, caught between political promises, economic pressures, and a rapidly evolving workforce landscape. Read Next: Here's what Americans think you need to be considered wealthy. Peter Thiel turned $1,700 into $5 billion—now accredited investors are eyeing this software company with similar breakout potential. Learn how you can Midjourney Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Fox Business Host Presses Trump's Labor Secretary: How Come We're Losing Manufacturing Jobs When There's A Big Push To Bring Them To The U.S. originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Wall Street Journal
an hour ago
- Wall Street Journal
Trump Disclosure Shows $57 Million in Earnings From Early Crypto Push
President Trump earned around $57 million from his stake in a family-backed cryptocurrency firm last year, according to a new financial disclosure form, showing the early returns on a burgeoning digital-asset empire. Trump's annual financial disclosure, released by the Office of Government Ethics, reveals his vast and varied income streams and holdings, covering everything from golf resorts to merchandising deals to stock investments in such companies as Apple and Berkshire Hathaway.
New York Post
an hour ago
- New York Post
The Israel-Iran conflict is shaking the markets — but nervous investors aren't panicking
Wall Street's myopia was on full display in the immediate aftermath of the Israeli airstrikes against Iran. Many of us were worried about the possibility of World War III as we saw the attacks almost in real time Thursday night. Many of my sources were trying to gauge impacts on the Dow, oil prices and interest rates. Advertisement You can make a good case that there is a place for such shortsightedness. Leave the far-reaching geopolitical analysis to those who are better equipped to game-plan those outcomes, and the investor class should stay in its lane. People still have to save for retirement, invest those savings, even if the Middle East is imploding. Advertisement That said, the Wall Street take on the contretemps is certainly worth dissecting. You can glean, if you look through the conflict's short-term impact on specific pieces of economic data and push the smart money on their meaning, some interesting broader conclusions about how the Israel-Iran conflict will ultimately shake out. The market's top-line response was muddled. Stocks initially sold off sharply, then came back only to tank into the close as Iran retaliated against Tel Aviv. Advertisement Oil prices — which are always sensitive to conflicts in the Middle East — jumped about 7%. But we've all seen worse on less existentially serious stuff. The Dow closed down less than 800 points; the rollout of the Trump tariff plan — before Treasury Secretary Scott Bessent began putting the old genie back in the bottle to prevent an economic meltdown — saw far more wild moves in all sorts of investments. When the trade war was raging, bond prices at one point tanked so much, you would think we were on the verge of the apocalypse. Advertisement On Friday, the 10-year bond yield rose but is still below 4.5%, meaning people weren't rushing to the safe haven of Treasuries to plan for the worst. Gold rallied, but it's been running hot for weeks amid the fears of tariff-induced inflation. Not panicking In other words, it seems like investors are nervous, but also they're not panicking because something good could follow something scary. Namely, Israel neutered not just a foe that is developing nukes and threatening its destruction. It also has degraded the world's most aggressively belligerent nation — the leading state sponsor of terrorism — by decapitating much of Iran's military leadership, key scientists that were on the verge of developing nukes, as well as large swaths of its armed forces. In saving itself, Israel did us all a favor — even the Arab world, much of which abhors Iran's destabilizing militarism. For investors, it could mean at the very least lower energy prices in the future. Rich Arab countries finally might agree to recognize Israel, and the investment opportunities that will bring. Advertisement I know saying the conflict could be long-term good for the markets sounds ignorant given what's at stake. But life isn't mostly binary. Fortunately in this case, what's good for stocks could be good for the world. Of course, one day in the market is just one day. Advertisement So much more will happen. Israel says it's not done with its military action. Iran retaliated, landing missiles in the heart of Tel Aviv after a first wave of deadly drones was largely swatted away by Israel's defenses. Advertisement I have family in Israel so I pray for their safety as I've done almost every day since Oct. 7. US military installations could be attacked. But some of my trading desk sources are pointing out that Israel seems to have its game plan down pretty solid, and the Iranian attack against us would be foolish since it already has its hands full. The Israelis knew who to take out — the generals and scientists — and it clearly knew how Iran could respond. It has already largely eliminated Iran's proxies, Hezbollah and Hamas. Advertisement Notice how Israel didn't take out Iran's oil infrastructure, at least not yet. If it did, oil prices would be higher and markets far more volatile. And maybe Israel Prime Minister Benjamin Netanyahu is betting on the Iranian people. I've never been to Iran, but I know plenty of Iranian Americans. They tell me the country is largely secular, run by a fanatical minority that Israel might be weakening significantly. This could be the push for regime change that we've been talking about for years. Trump kept in the loop President Trump here has been at his best, my Wall Street sources remind me, another reason they're not panic-selling. Israel kept him in the loop. He alerted the world that the attacks would happen Thursday. He then began distancing himself and our country from the direct conflict, while prodding Iran to get back to the negotiating table and end its nukes program. Who knows, they might finally listen. Wall Street is always looking for 'black swan' events — stuff most people don't see that could lead to catastrophic market results. Wars are terrible. It would be great if Iran chose peace, but maybe eliminating it as a threat to Israel and a lot more is a black swan that produces some long-term peace and prosperity. Let's hope so and pray for the peace dividend it should deliver.
