Image © World Economic Forum Annual Meeting 2026. Copyright: World Economic Forum/Valeriano Di Domenico.
The President invested a lot of time in knocking the Federal Reserve.
The dollar doesn't like it when the U.S. President hits the Federal Reserve and its Chairman Jerome Powell.
And that's exactly what's happened in Davos this week, with Donald Trump making numerous references to the Federal Reserve and its attitude on interest rates.
"Jerome to late Powell, he's always too late," said Trump in his address. "We're going to have somebody great and we hope he will do a good job."
The Fed Chair will soon be replaced with a pick that is expected to be more malleable to Trump's desire for lower interest rates.
Above: Although stocks rose, the dollar didn't recover the previous day's selloff. We think this reflects Trump's comments on the Fed and interest rates.
Indeed, Trump spent a great deal of time talking about the cost of living facing Americans and the role high interest rates play in exacerbating the issue.
He thinks the Fed should be bringing in lower rates.
"Stupid people like Powell, they raise interest rates," said Trump.
The dollar reflexively dislikes Trump's attacks on the Fed, judging that Fed independence is key to the credibility of the institutions underpinning dollar strength.
More directly, lower interest rates at the Fed weigh on short-term bond yields which automatically weigh on the dollar.
He opined on why the U.S. stock market no longer responds to good news on the economy:
"When we have a great month they (the Fed) want to kill it" with interest rate rises, he said.
Trump wants to get back to a place where good economic news was good for the market. He says the current situation sees good news trigger market weakness because traders fear it means inflation will rise.
And higher inflation invites rate rises.
But Trump said "growth doesn't mean inflation... growth can fight inflation".
This is a clear indication the President is going to continue pursuing lower interest rates. For the dollar, this is a headwind.