Dollar Decline Amid Fed Speculations Fuels Record Highs in Global Stocks

The dollar plummeted to its lowest point in three years as speculation about the Federal Reserve's future leadership stirred up new predictions about U.S. interest rate cuts. This development spurred global stocks to reach their second record high in three days, amid ongoing trade and geopolitical negotiations.

Reports suggesting President Trump intends to choose the next Federal Reserve chair soon have further motivated market participants to bet on aggressive rate cuts. The possibility of replacing Jerome Powell as chair has left the U.S. currency down nearly 0.5% on Thursday, marking more than a 10% decrease this year. If this trend persists, it would represent the steepest first-half-year fall since the advent of free-floating currencies in the 1970s.

Meanwhile, Wall Street saw modest gains, and the MSCI world stocks benchmark stands almost 8% higher year-to-date, although European shares felt pressure as the euro neared its highest level since 2021. As traders position themselves for potential tariff negotiations with Washington, concerns mount over the independence of the Federal Reserve amidst the looming July 9 tariffs deadline set by President Trump.

(With inputs from agencies.)