SINGAPORE — Asian stocks wobbled and the dollar was under pressure on Thursday as the prospect of an early appointment of the next Federal Reserve Chair by President Donald Trump stoked concerns over the independence and credibility of the US central bank.
The US dollar selling kicked up a notch after a media report said Trump has toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell’s replacement by September or October in a bid to undermine his position.
A move like that is seen by some analysts as an effort to influence monetary policy through a “shadow” Fed chair even before Powell leaves office in May 2026.
While markets have been soothed by a ceasefire between Israel and Iran that appeared to be holding, reducing the risks of disruptions to the oil trade and underpinning sentiment, traders are on edge about Trump’s July 9 deadline on imposing tariffs on trading partners and his pressure on the Fed.
In stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan was slightly higher as the rally in Wall Street took a breather overnight. Tokyo’s Nikkei rose 1.5 percent to highest since lat January.
European stock futures pointed to a muted open with currency markets taking the spotlight. The euro firmed to its strongest level since September 2021 and last fetched $1.6837.
The Swiss franc firmed to a decade-high while the Japanese yen strengthened 0.3 percent to 144.815 per dollar.
Trump has repeatedly criticised Powell for not cutting interest rates and has floated the idea of firing him or naming a successor soon, denting investor confidence in US assets and undermining the central bank’s independence.
“I think it’s a given that Trump’s pick to succeed Powell, when it comes, will be one that sits at the highly dovish end of the spectrum and will support Trump’s agenda of lowering interest rates,” said Tony Sycamore, market analyst at IG.
