There’s scope for the dollar to extend its 2025 slump by as much as 9% if President Donald Trump names a successor to Federal Reserve Chair Jerome Powell this year, months before his term ends, said Helen Given, a foreign-exchange trader at Monex USA.
- “There’s room for a further 4-5% slide for BBDXY this year, and should Trump name a replacement for Powell before year-end, that could go all the way to 8-9% as the Fed outlook changes,” Given said in an interview Thursday
- As the dollar slide deepens, high-interest rate currencies will benefit, MXN, BRL in particular, she said
- NOTE: The Bloomberg Dollar Spot Index is down nearly 9% this year
- “The larger-scale implications of a potential replacement for Powell before the end of his term could very well be accelerating the short dollar positioning we saw through the first half of this year, as investors assess the impacts of a central bank that may not have the appropriate level of independence from the federal government when it comes to monetary policy,” Given said
- “Add to that a very weak final GDP reading this morning coupled with a GDP price index that was revised upward, and the fortunes of the macro US economy for the back half of this year don’t look so great,” she said
Reporting by Anya Andrianova
