In a startling twist that sent shockwaves through global markets, President Donald Trump's recent consideration of firing Federal Reserve Chairman Jerome Powell has raised eyebrows and concerns amongst investors. This contentious step could undermine the Fed's independence—a cornerstone for US economic stability and investor confidence.

Trump unleashed a series of stinging critiques against Powell on April 17, igniting fears that such a drastic action could trigger a significant decline in the value of the US dollar. As a result, traders reacted swiftly, driving the dollar down against nearly every major currency.

The dollar plummeted by 1% to a decade-low of 0.8083 against the traditionally safe Swiss franc, while also dipping similarly against the Japanese yen and euro. In Singapore, the dipped 0.5% to 1.3041, marking a steep 3.4% decline against the Singapore dollar in 2025 alone.

Gold Shines Bright amid Dollar Weakness

With the dollar faltering, gold prices soared over 1%, reaching a new peak of $3,370.17 per ounce—an impressive 26% increase this year. This surge in gold is indicative of a growing trend among investors seeking refuge amid economic uncertainty.

Stocks also took a hit, with S&P 500 futures dropping 0.64% and Nasdaq futures down 0.53%, reflecting a jittery market environment.

What’s at Stake? The Fed's Independence

Charu Chanana, chief investment strategist at Saxo in Singapore, highlighted the rising fears among investors: "Markets are already on edge due to escalating geopolitical tensions, and now Trump's potential interference with the Fed adds another layer of uncertainty." Chanana warned that any hint of political pressure could undermine the Fed's credibility and complicate future monetary policy.

With Trump’s tarriff policies previously wreaking havoc on financial markets and lending credibility to a retreat from the 'safe-haven' status of US assets, this latest event compounds the predicament.

Is Dollar Weakness a Welcome Change?

Curiously, Trump may view this dollar weakening as advantageous, as he has previously stated that a lower dollar could enhance American product competitiveness internationally. However, the ramifications of his actions prompt a closer look at Fed independence.

Austan Goolsbee, president of the Chicago Federal Reserve, expressed concerns on April 20, hoping the US does not drift toward an era where political pressures challenge the Fed's autonomy.

In a note from finance giant Brown Brothers Harriman, Win Thin, the global head of market strategy, stated, "We believe dollar weakness will continue. The intensifying attacks on Fed independence indicate that we should view this situation seriously and with warranted concern."