The U.S. dollar sank to its lowest level in three years on Thursday following a report that President Donald Trump is planning to pick his nominee to serve as the next chair of the Federal Reserve early.
The Wall Street Journal’s U.S. Dollar Index – which measures the dollar’s strength relative to a basket of 16 foreign currencies – dipped to a low of 97.01 on Thursday morning before paring some of that decline to 97.07.
The dollar’s decline comes in the wake of a report by the Journal on Wednesday that suggested Trump is considering announcing his pick to succeed Fed Chair Jerome Powell, whose term as chair ends next year.
Trump has repeatedly criticized Powell and the Fed for not cutting interest rates, while also slinging insults, calling him a “numbskull” along with the derisive nickname “Mr. Too Late.” At this week’s NATO summit, Trump said during a press conference that Powell is “terrible” and is a “very average mentally person” who has “low IQ for what he does.”
“Generally, the markets want an independence of the Fed,” said Carlyle Group co-founder David Rubenstein during an interview Thursday on “The Claman Countdown” when asked why the president’s comments affect the dollar. “The Fed independence since the Fed was created… has been a very important bulwark of our economic system. So, to the extent that the Fed is not seen as independent, it hurts the dollar and therefore the dollar goes down.”
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Federal Reserve policymakers have cited economic uncertainty stemming from trade policy and potential inflation from tariffs as one of the main reasons for leaving the benchmark federal funds rate at a range of 4.25% to 4.5%, where it has been since the Fed’s last cut in December.
The Fed held rates constant for its fourth consecutive meeting last week, and is scheduled to hold its next meeting in late July.
The president is considering naming Powell’s successor by September or October, according to the Journal’s report, which cited people familiar with the matter – some of whom suggested to the outlet an announcement could occur this summer.
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Among the leading contenders Trump is considering for the role are former Fed governor Kevin Warsh and National Economic Council Director Kevin Hassett, while other possibilities include Treasury Secretary Scott Bessent, former World Bank President David Malpass and Fed governor Christopher Waller, the Journal reported.
If Trump were to announce the nominee this year, it would give the presumptive future Fed chair more of an opportunity to signal how they would approach monetary policy decisions prior to the end of Powell’s term, the report noted.
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However, monetary policy decisions are made by the board’s voting members as a group and not solely by the chair, so it’s unclear the extent to which a quasi-shadow Fed chair would be able to influence those moves.
Powell’s term as Fed chair is due to expire in mid-May 2026, though he could choose to continue to serve as a member of the Fed’s board of governors once his chairmanship ends.
His term as a member of the Fed’s board of governors is scheduled to conclude at the end of January 2028.
He has declined to say whether he will remain at the Fed after his term as chair concludes, saying at a recent press conference that his only focus is on handling monetary policy moves in the near term.
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