Today, the US dollar fell sharply, with the intraday drop of more than 1%, falling below the 99 mark for the first time since April 2022; US stock index futures also plunged, with the intraday drop of the Nasdaq, S&P 500 and Dow Index and the three major index futures falling by nearly or more than 1%.

Some analysts pointed out that investors' concerns about the "trade war" and US President Trump's public criticism of the Federal Reserve have hit market sentiment and triggered a "panic" decline in US assets.

US dollar and US stock futures dive

The global investors' selling of U.S. assets continues. During the Asian trading session on April 21, the US dollar plunged sharply. The dollar index, which measures the US dollar against six major currencies, once fell by more than 1% during the session and fell below the 99 mark, the first time since April 2022.

As of 14:00, the US dollar index was 98.2375, a drop of 1.00%. The yen and the euro strengthened one after another. Among them, the yen rose 1.04% against the US dollar, setting a new high since September last year; the euro rose by more than 1% against the US dollar, breaking up 1.15, setting a new high since November 2021. Since its high on January 13 this year, the US dollar index has fallen by more than 10%.

US stock index futures also fell sharply, with Nasdaq futures falling by more than 1% during trading, while S&P 500 futures and Dow futures fell by nearly 1%. As of 15:13, Nasdaq futures fell 1.09%, Dow futures fell 0.87%, and S&P 500 futures fell 0.94%. U.S. bonds also continued to be sold off, with the benchmark U.S. 10-year Treasury yield rising 3 basis points to 4.358% in the early Asian session.

Bloomberg pointed out that Trump's criticism of the Fed has sparked market concerns about the Fed's independence, and the US dollar and U.S. stock index futures fell. Gold, which is usually inversely related to the US dollar, rose to record levels on Monday, with spot gold breaking through $3,390 per ounce during the session. Since the beginning of the year, spot gold has increased by more than 29%.

On April 18 local time, Trump delivered a speech at the White House, reiterating that Federal Reserve Chairman Powell should lower interest rates. This is also the second consecutive day that Trump has cut interest rates and put pressure on Powell. Previously, on the 17th, Trump asked the Federal Reserve to cut interest rates immediately and said that he could let Powell leave immediately.

On the same day, Kevin Hassett, director of the U.S. National Economic Commission, said that Trump is still studying ways to fire Fed Chairman Powell. Subsequently, the US dollar weakened against major currencies. Traders said the remarks prompted hedge funds to sell the dollar on Monday.

Analysts said that condemning the Fed not only undermines the principles of Fed's independence, but also has the potential to politicize U.S. monetary policy and deeply disturb the market. "Frankly speaking, firing Powell is contrary to people's beliefs. If the Fed's credibility is questioned, it could seriously undermine confidence in the dollar," said Wong, a foreign exchange strategist at OCBC in Singapore.

Institutions: US dollar will continue to weaken

The decline in U.S. assets suggests that once popular “America First” trading is reversing after Trump raises global tax revenues, disrupts U.S. Treasury markets and erases trillions of dollars from global stock markets. The dollar has been under pressure after the U.S. imposes tariffs, and indicators that measure currency strength have weakened for three consecutive weeks.

"The market is already in tension due to escalating geopolitical tensions, and now there is growing concern that Trump's possible intervention in the Fed could add another layer of uncertainty." Charu Chanana, chief investment strategist at Saxo Bank, said any sign of political pressure on monetary policy could weaken the Fed's independence and complicate future interest rate paths, just as investors seek stability amid global volatility.

"We believe the dollar will continue to be weaker and the attack on Fed independence is intensifying," Win Thin, head of global market strategy at Brown Brothers Harriman & Co., wrote in a note.

Trump's tariffs disrupted financial markets and triggered a fierce sell-off in U.S. Treasury bonds and the dollar, which has created new doubts about the long-term belief in the safe-haven status of U.S. assets. Chicago Federal Reserve President Ostan Goulsby warned not to try to undermine the Fed's independence.

Chicago Federal Reserve Bank President Goulsby said on CBS' "Facing the Country" last Sunday that he did not want the Fed's monetary policy independence to be questioned. Gulsby said economists agree that central banks that can implement monetary policy without political interference can make their economies better. However, for central banks that do not have this freedom, inflation will be higher, economic growth will be slower, and the job market will be worse. “I strongly hope that we won’t put ourselves in a situation where monetary independence is questioned because that would hurt the Fed’s credibility.”

French Treasury Secretary Eric Lombard also warned that if Trump fired Federal Reserve Chairman Powell, it would endanger the credibility of the dollar and undermine the stability of the U.S. economy. He further pointed out that the result will be higher costs to repay debts and severe chaos in the country's economy. Lombard added that these consequences will prompt U.S. negotiations to end tensions sooner or later.

In addition, due to the tariffs, American business owners and CEOs have begun to hoard inventory, and some American consumers are also panic buying high-priced goods to deal with the possible tariff policies Trump has implemented. Goulsby said this sudden surge in buying may lead to an "artificial inflated" level of economic activity.

Goulsby noted that hoarding inventory and consumers accelerated buying decisions could push up U.S. economic activity in April and lead to a slowdown in the coming months. "Initially economic activity may seem artificially raised, and then it may drop by the summer - because people have bought everything." Goulsby said industries affected by Trump's tariffs, especially the automotive industry, are now most likely to stock up on stockpiles in case import tariffs for other countries further rises.

Fed's San Francisco Fed Chairman Mary Daly said the Fed's interest rate may last longer than expected due to inflation risks, but may also cut interest rates later this year.

On Wednesday, the United States will release the PMI, which will reflect the general situation of local economic activities after US President Trump imposed a series of "reciprocal tariffs".

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