Trump's Criticism of Fed Sends US Stocks Down 2.5%, Dollar to 3-Year Low

The US dollar and stock markets experienced significant declines as President Trump intensified his criticism of the Federal Reserve, particularly its chair, Jerome Powell. The President's repeated calls for lower interest rates added to the market's volatility, with the Dollar Index hitting a three-year low. This pressure from the President raised concerns about the independence of the Federal Reserve, further exacerbating market anxiety.

The Dow Jones Industrial Average saw a substantial drop of 2.5%, closing at 38,170.41. The S&P 500 also declined by 2.4%, finishing at 5,158.20, while the Nasdaq followed suit with a similar downward trend. The selloff in U.S. assets deepened as Trump's rhetoric against the Fed and tariff concerns continued to weigh on investor sentiment.

Meanwhile, cryptocurrencies, including Bitcoin, saw gains as investors sought alternative assets amidst the market turmoil. The U.S. dollar index slipped to 98.28, its lowest level in three years, reflecting the broader market's response to Trump's pressure on the Fed. This shift in the dollar's value also impacted other currencies, with the Indian rupee gaining over 27 paise as the dollar weakened.

The market's reaction to Trump's comments underscores the delicate balance between political influence and economic policy. The President's criticism of the Fed and his calls for lowering interest rates have added to the uncertainty, making it challenging for investors to navigate the market landscape. As the situation continues to evolve, market participants will be closely monitoring any further developments and their potential impact on financial markets.

Trump's latest salvo against Powell saw the US stock market slump and the dollar continue to weaken over uncertainty. The S&P 500 has now declined by more than 12% since the beginning of the year, and the Nasdaq is down almost 18% in the US tech stock exodus. The stock slide follows escalating tension between Donald Trump and Jerome Powell and growing concern over the impact of trade tariffs.

Trump has reiterated his call for lowering interest rates, which Powell, who has been labelled as “Mr. Too Late” and a “major loser” by the POTUS, has kept high at 4.5%. Last week, Powell took a swipe at Trump’s trade tariffs, saying they could lead to a dangerous economic mix of rising prices and slowing growth, or “stagflation.” Trump responded with a call to fire the central bank chair, stating at the time that his “termination cannot come fast enough.”

The Fed is expected to maintain its wait-and-see policy approach at its May 7 meeting, with interest rate markets predicting just a 13% chance of a rate cut. The US Dollar Index (DXY) — a measure of the strength of the greenback against a basket of leading currencies — has also slipped more than 10% so far this year. This week it fell to a three-year low below 98 on April 21. “Everyone needs and wants a weaker dollar to service their dollar debts,” commented Real Vision founder and CEO Raoul Pal on April 22. “This is the purest form of global liquidity and is the largest driver of global M2 [money supply] currently,” he added.

Meanwhile, crypto markets have held on to weekend gains with total capitalization remaining at $2.83 trillion at the time of writing. Bitcoin (BTC) is keeping digital asset markets buoyed, hitting a four-week high of $88,500 on April 22. “Amid one of the most turbulent periods for global markets in years, Bitcoin is showing impressive resilience,” commented Bitfinex analysts in a recent market update.