Trump vs. Powell
Is the Federal Reserve Headed for a Shakeup?
[Image: Pixabay]
Introduction
The financial markets are gripped by another escalating tension — not just between nations, but within the U.S. government itself. President Donald Trump and Federal Reserve Chair Jerome Powell appear to be on a collision course over the future of U.S. monetary policy. While Powell warns against the inflationary risks of Trump’s aggressive tariff policies, Trump is demanding immediate interest rate cuts — and threatening to fire Powell if he doesn’t comply.
[Image: Getty Images]
What actually happened between Trump and Powell?
The stakes are enormous. Trump’s trade wars have already driven inflation higher and rattled global markets. Powell has made it clear that the Fed sees Trump’s sweeping tariffs — including triple-digit import taxes on Chinese goods and broad levies on metals and cars — as “stagflationary,” combining the worst of inflation and slowing growth.
Despite Trump’s threats, legal experts highlight that a U.S. president may not have the clear authority to remove a Fed Chair without cause. Still, even the threat of removing Powell introduces deep uncertainty to financial markets. Economists, including Larry Summers, warn there is a non-negligible chance — between 10% and 50% — that the U.S. could face a financial revolt similar to the UK’s “Liz Truss moment” of 2022 if the Fed’s independence is undermined.
[Image: Pixabay]
Trump vs. Powell’s Impact on Global Market
The tension between Trump and Powell is already influencing global markets:
- U.S. Dollar Index fell below 100, its weakest level since mid-2023.
- 10-year bonds continue to climb, reflecting fears of entrenched inflation.
- Dow Jones going down over 500 points at one point, although the S&P 500 and Nasdaq have shown mixed resilience.
- Gold prices surged as investors sought safe-haven assets amidst policy uncertainty.
- Asian currencies, including the Singapore Dollar (SGD) and Malaysian Ringgit (MYR), have strengthened against the dollar as capital flows shift.
As you prepare for the volatile weeks ahead, consider these actionable strategies:
- Focus on Safe-Havens: Gold and Swiss Franc CFDs could benefit from ongoing uncertainty.
- Watch U.S. Treasuries: Rising yields can create opportunities for short-term bond CFD positions.
- Monitor the Dollar: A weakening USD may create bullish setups for EUR/USD, SGD/USD, and other major forex pairs.
- Stay Agile in Equities: U.S. stock indices may remain volatile. Look for tactical short-term trades rather than long-term positions.
- Use Risk Management: Tighten stop-loss orders and diversify exposure across different asset classes to manage risks.
[Image: Reuters]
Conclusion
The growing rift between Trump and Powell marks another layer of uncertainty for global financial markets. As always, staying informed, agile, and strategic is key.
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