Dollar on shaky ground as markets fret over Fed's independence
TOKYO : The dollar was on a fragile footing on Thursday having lost ground overnight as concerns US President Donald Trump was preparing to fire the Federal Reserve chair shook confidence in US markets.
Trump denied reports he was planning to dismiss Fed Chair Jerome Powell, but he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates.
Investors worry that removing Powell before his term ends in May 2026 would undermine credibility in the US financial system and the dollar as a safe-haven currency.
And a more dovish Fed could lead to a return of inflation and negative real yields on Treasuries, said Mahjabeen Zaman, head of foreign exchange research at ANZ.
'If that comes to fruition, you're going to see a much weaker dollar than we're already expecting,' Zaman said in an ANZ podcast. 'Such an event, if that even does happen, it will raise questions for Fed independence and credibility, so I think it's only going to be an increase in volatility.'
Trump has railed against Powell for months for not easing rates, which he says should be at 1% or lower.
Bloomberg reported that the president is likely to fire Powell soon, and a source told Reuters that Trump polled some Republican lawmakers on firing Powell and received a positive response. Trump said that the reports were not true.
'I don't rule out anything, but I think it's highly unlikely unless he has to leave for fraud,' Trump said, a reference to recent White House and Republican lawmaker criticism of cost overruns in the US$2.5 billion renovation of the Fed's historic headquarters in Washington.
The dollar index, which measures the greenback against major peers, was little changed at 98.384 after a 0.3% slide on Wednesday. The US currency ticked up 0.2% to 148.14 yen, after a 0.6% decline overnight.
The euro stood at US$1.1632, down 0.01%. Sterling edged 0.1% lower to US$1.3409.
Investors remain focused on tariffs ahead of an Aug 1 deadline when many trading partners face higher trade levies.
Trump said on Wednesday the US will probably 'live by the letter' on tariffs with Japan and may have another trade deal coming up with India, following his announcement of an accord with Indonesia on Tuesday.
In Japan, investors are focused on a potential power shift in upper house elections this weekend that could strain already frail finances, with long-dated yields soaring to all-time highs as the vote nears.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
13 minutes ago
- The Star
Australian state seeks to enshrine work from home in law
SYDNEY: The premier of the Australian state of Victoria announced Saturday (Aug 2) plans to enshrine working from home in law, saying it should be "a right, not a request". Under Jacinta Allan's plan, workers would be entitled to work from home at least two days per week, if the job allows. "We're doing that because we know what the evidence tells us - workers are more productive, it saves time for families, it saves money for families," Allan said, launching the proposed policy at the Labor Party's state conference. "This change will mean that any worker who can reasonably do their job from home has the right to do so for at least two days a week." Allan said the policy would now go out for consultation with workers, employers and unions. She said it was important to "get the details of this important change right". Allan said the move could save the average worker US$110 a week, cut congestion on roads, and keep more women in the workforce. During national elections in May, the opposition Liberal-National coalition's plan to eliminate remote work was partly blamed for its poor performance. Victoria's opposition leader, Brad Battin, said work from home arrangements had been valuable, and that he supported measures that promote better work-life balance. The measure is likely to come before the state parliament next year. - AFP
The Sun
43 minutes ago
- The Sun
US envoy meets Israeli hostage families amid Gaza war tensions
TEL AVIV: US envoy Steve Witkoff met with distraught relatives of Israeli hostages still held in Gaza on Saturday, amid growing concerns over their survival nearly 22 months after Hamas's October 2023 attack. The meeting took place as international pressure mounts for a resolution to the conflict. Witkoff was greeted by hundreds of protesters in Tel Aviv, some applauding while others pleaded for assistance. Videos circulating online captured the emotional scene, with families chanting 'Bring them home!' and 'We need your help.' The envoy later held a closed-door discussion with representatives from the Hostages and Missing Families Forum. The gathering followed Witkoff's visit to a US-backed aid station in Gaza, where he assessed efforts to deliver food to the war-torn Palestinian territory. 'The war needs to end,' said Yotam Cohen, whose 21-year-old brother Nimrod remains captive. 'The Israeli government will not end it willingly. It has refused to do so.' Of the 251 hostages taken during the initial Hamas assault, 49 are still believed to be in Gaza, with 27 declared dead by Israeli authorities. After the meeting, the Forum released a statement confirming Witkoff's personal commitment to securing their release, alongside US President Donald Trump. Hamas intensified psychological pressure on families by releasing a second video of hostage Evyatar David, 24, appearing emaciated in a tunnel. His family condemned the footage as 'vile propaganda,' accusing Hamas of deliberate starvation. French Foreign Minister Jean-Noel Barrot denounced the video as 'despicable,' urging unconditional release and Hamas's disarmament. Ceasefire negotiations mediated by the US, Egypt, and Qatar collapsed last month, leaving Prime Minister Benjamin Netanyahu under domestic and international scrutiny. Meanwhile, UN agencies warn of famine in Gaza, with over two million civilians at risk. Israeli military chief Lieutenant General Eyal Zamir rejected claims of intentional starvation, calling them 'deceitful accusations.' However, displaced Gazans like Modallala Dawwas reported severe malnutrition, with her daughter's weight plummeting from 25kg to 10kg. The conflict has claimed 1,219 Israeli lives, mostly civilians, and over 60,332 Palestinian lives, per Gaza's health ministry. Recent Israeli strikes killed 34, including five near a food distribution site. - AFP
Focus Malaysia
an hour ago
- Focus Malaysia
Has JAKIM's strict halal compliance standards been compromised in exchange for US tariff reduction?
ASIDE from the purchase of the purchase 30 Boeing planes valued at US$9.5 bil (RM40.63 bil), detractors have set off alarm bells that Malaysia's strict halal compliance standards would have to make way for the recent reduction of US reciprocal tariffs from 25% to 19%. This follows a revelation by Religious Affairs Minister Datuk Dr Mohd Na'im Mokhtar yesterday (Aug 2) that the US has requested for JAKIM-accredited bodies to conduct halal standard compliance audit, ie for slaughter of cattle, instead of done directly by the Department of Islamic Development Malaysia itself. 'I think the US really doesn't want JAKIM's involvement and wants to control the halal standard of their products with their own agencies,' penned PAS activist Nurul Islam Mohamed Yusoff on his Facebook page. 'Who is the US to direct Malaysia to do this, don't do that according to its whims and fancy? 'If this happens, we'll eventually have to accept as halal if they say it's halal. No question asked.' It is learnt that JAKIM would appoint recognised foreign halal certification bodies and authorities (CB) in countries that come under its audit. In the case of the US, the three appointed CBs are the (i) Islamic Food and Nutrition Council (IFANCA); (ii) Islamic Services of America (ISA); and (iii) American Halal Foundation (AHF). For the record, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz has denied claims that Malaysia has compromised its halal certification standards as part of on-going trade talks with the US. Addressing allegations that Malaysia would lower its halal standards as a concession to the US yesterday (Aug 2), he also dismissed claims of exclusive deals with the Americans for rare earth minerals. Dubious halal standards Nurul Islam went on to express grave concern by pointing to an article entitled 'Halal Food Fraud in the USA: Challenges and Solutions' which exposed fraudulent practices in the US halal certification control processes. 'Imagine in the future, meat from the US with a halal label will be floating around the Malaysian market but their halal-ness are not guaranteed and the saddest thing is that JAKIM can't take action,' lamented the Central PAS Information Committee Research and Policy Department director. 'Pity Malaysians who may end up buying and consuming such problematic meat.' 'This is not to mention the various corrupt practices in the monopoly of supplying halal meat as happened in the meat supply to Egypt. Will Malaysia also face a similar issue one day?' Interestingly, Nurul Islam further wondered how could Indonesia continue with its halal standards by requiring all imported products to have the Indonesian halal logo beginning 2026. 'Moreover, it (Indonesia) only faces a 19% tariff (down significantly from 32% previously). The US didn't even bother to touch implementation aspect of the Indonesian halal standards,' he hit out. 'I hope the Madani government maintains the existing JAKIM system to appoint CBs that they recognise and only allow recognised CBs to issue JAKIM halal certificates to companies there. 'This is a matter of Islamic law and religious principles. The last time I checked, Islam is still the official religion of Malaysia.' – Aug 3, 2025
