Dollar Rises as Trump Retreats from Fed Threats Amid Trade Optimism

The U.S. dollar experienced a sharp rise after President Trump withdrew threats to fire Federal Reserve Chair Jerome Powell, alleviating investor concerns. Optimism regarding U.S.-China trade negotiations further contributed to a positive market sentiment, boosting the dollar's performance against major currencies.

The U.S. dollar surged and later stabilized on Wednesday following President Donald Trump's decision to back away from dismissing Federal Reserve Chair Jerome Powell, which reassured investors. Optimism surrounding potential U.S.-China trade deals also improved market sentiment, helping the dollar rebound against various currencies.

Trump's statement, "I have no intention of firing him," helped ease concerns about the Fed's independence. This declaration coincided with the dollar's sharp rise in early Asian trading before it settled later in the day. The dollar gained over 1% against the yen, with significant gains also recorded against the Swiss franc.

A positive outlook on trade talks, supported by comments from Trump and U.S. Treasury Secretary Scott Bessent, suggested a de-escalation in U.S.-China trade tensions, possibly leading to reduced tariffs. Analysts noted this as a driver for the dollar's current trajectory. Meanwhile, the broader focus remained on trade negotiations with other countries aiming for less stringent rates.

(With inputs from agencies.)