US Dollar wobbles as Powell risks lame duck status

Trump just lobbed a monetary policy grenade into the temple of Fed independence, and the dollar flinched hard. Word is he's prepping to name a successor to Powell well before the chair’s May 2026 expiration date—think early fall, not late spring. That’s not succession planning; that’s setting up a shadow Fed chair to start jawboning policy months in advance. And markets heard the dog whistle loud and clear: this isn’t about continuity—it’s about control.

The greenback promptly buckled under the weight of the news, slipping against every G10 peer in early Asian trade. Traders smelled what this was: an open audition for who can promise the deepest cuts and the most pliant policy. With names like Warsh and Bessent getting airtime, we’re not just talking dovish—we're talking the kind of "growth-at-any-cost" mindset that treats inflation as someone else's problem.

This isn’t just optics; it’s an open challenge to Powell’s credibility. Trump wants someone at the wheel who won’t tap the brakes—not even if the dashboard’s flashing red. He’s looking for a rate-slasher with camera presence and campaign loyalty, not another independent technocrat. If that means putting a future Fed chair on display months ahead of schedule, so be it. The goal isn't to wait for Powell to exit—it's to make him irrelevant now.

In FX terms, this is political risk morphing into monetary pressure. If Trump follows through and an unofficially anointed candidate starts talking cuts before Jackson Hole, we’re looking at a slow bleed on the dollar through the summer. A “lame duck” Powell in the face of a vocal rate-cutter-in-waiting isn’t going to inspire confidence, especially as global capital starts pricing in asymmetric political pressure on U.S. policy. That’s how rate differentials lose their premium—and how the dollar loses altitude.

For now, Powell’s still at the helm. But make no mistake: if Trump names a shadow chair by September, markets will have two Feds—only one of which is flying with the autopilot on. The other? Strapped in the cockpit, whispering “lower” over the intercom.