Dollar Pummeled On Risk To Fed's Independence

2025-06-26 07:45:00 ET

Overview

The US dollar ( DXY ) was weak yesterday but it has been pummeled today. It is down against the G10 currencies and all but the Russian ruble and Turkish lira among emerging market currencies. The proximate trigger of today's sell-off were news reports that a successor to Fed Chair Powell could be announced in a few months. The attempt to influence the Fed so directly does not sit well with investors. In the Fed funds futures market, the odds of a July cut have crept up but are around a 1-in-4 chance. However, there are now almost 63 bp of easing discounted before the end of the year. That is the most since early May. This, combined with the month/quarter end flows and the looming end of the respite from the so-called reciprocal tariffs (July 9), takes a toll....

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