The US dollar weakened and Treasury yields fell on Thursday, driven by expectations that interest rate cuts could come sooner than previously expected. The move came after a Wall Street Journal report said President Donald Trump could speed up the announcement of a new Federal Reserve chairman, who could replace Jerome Powell, possibly as early as September.
A Bloomberg index tracking the dollar fell 0.4%, hitting its lowest level in more than three years. Treasury yields dropped across the board, with the 10-year yield down three basis points to 4.26%.
The possibility of an early appointment has sparked speculation of a “shadow chair”—an unofficial successor who could sway market sentiment well before officially taking office. Given Trump’s repeated criticism of Powell’s steady-rate stance, investors expect a more dovish replacement aligned with the president’s push for lower rates.
Market Reaction and Expert Views
“Trump has been talking about low rates, so he will pick someone who matches his views,” said Mahjabeen Zaman, head of FX research at ANZ Banking Group. “Whoever he announces will likely be dovish and could put further pressure on the dollar.”
Currently, markets are pricing in 62 basis points of rate cuts from the Fed by year-end—up slightly from the previous day. However, the odds of a July cut remain modest at 20%.
Equities and Global Markets
US equity futures recorded modest gains, with S&P 500 futures gaining 0.2% after the index closed flat in the previous session. Nasdaq 100 and Dow Jones futures gained 0.3% and 0.2%, respectively. European and Asian markets also gained, with the MSCI Asia Pacific index gaining 0.8% and the Stoxx Europe 600 adding 0.1%.
Currency Moves
The dollar’s recent slide—down more than 8% year-to-date—reflects persistent geopolitical uncertainty and growing doubts about its dominance in global trade. The euro climbed 0.3% to $1.1698, the Japanese yen strengthened 0.8% to 144.13 per dollar, and the British pound rose 0.5% to $1.3726.
Xin-Yao Ng of Aberdeen Investments noted, “Trump’s agenda is driving down rates. That may boost investment and spending, but it could also push inflation higher—further weakening the dollar.”
Commodities and Crypto
Oil prices jumped after President Trump reaffirmed his “maximum pressure” campaign on Iranian oil exports and US crude stockpiles saw another significant drop. Brent crude rose 0.3% to near $68 a barrel.
Gold gained 0.4% to $3,346.83 an ounce, while cryptocurrencies also advanced—Bitcoin rose 0.2% to $108,034.45, and Ether surged 2.2% to $2,493.47.
Bond Yields
U.S. 10-year Treasury: 4.26% (-3 bps)
German 10-year Bund: 2.53% (-3 bps)
UK 10-year Gilt: 4.45% (-3 bps)
