The dollar sank to a three-year low while world stocks notched their second record high in three days on Thursday as a report that Donald Trump was planning to choose the next Federal Reserve chief early fuelled fresh bets on U.S. rate cuts.
Dollar selling continued after the Wall Street Journal said the U.S. president – who has been urging the Fed to cut rates faster – was toying with the idea of selecting Chair Jerome Powell’s replacement in the next few months ahead of his formal departure in May next year.
It left the greenback down more than 10% for the year. If it stays that way in the coming days it will be its biggest first half of a year fall since the early 1970s – effectively the era of free-floating currencies.
European shares edged higher again, buoyed by signs that the Israel-Iran ceasefire appeared to be holding and that European Union leaders were preparing to set their stance for U.S. trade tariff talks ahead of a Trump-imposed deadline of July 9.
The region’s flagship STOXX 600 index was up 0.2% on the day while MSCI’s record-high world stocks benchmark was up 0.4%, leaving it almost 8% ahead for the year. The euro jumped 0.6% to $1.173, its strongest since 2021.
Euro traders also took heart from the outcome of Wednesday’s NATO summit that saw the bloc’s members of the alliance agree to spend 5% of output on defence – broken down into 3.5% on troops and weapons and 1.5% on looser, defence-related measures.
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