The dollar sank to a three-year low while world stocks notched their second record high in three days 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 was ongoing as U.S. trading picked up pace 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 next May.
It left the greenback (.DXY), opens new tab down nearly 0.5% on Thursday and more than 10% for the year. If it stays that way in the next few days it will be its biggest first half-of-a-year fall since the start of the era of free-floating currencies in the early 1970s.
Wall Street's main markets (.SPX), opens new tab, (.DJI), opens new tab, (.NDX), opens new tab opened modestly higher, which kept MSCI's record-high world stocks benchmark (.MIWD00000PUS), opens new tab almost 8% ahead for the year.
European shares were starting to flag, however , given the euro is now at its strongest level since 2021 and trade tariff talks are looming with Washington next week, ahead of a Trump-imposed global deadline of July 9. /FRX
"The striking thing on the dollar trend of the last six weeks is that in almost any market regime the dollar is struggling to appreciate," State Street's Michael Metcalfe said.
"It seems to be in something of a structural decline," he added, highlighting State Street data that investors were now the most negative they have been on the dollar - or "underweight" in banking-speak - since the COVID pandemic.
Euro traders also took heart from the outcome of Wednesday's NATO summit that saw 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.
U.S. President Trump had also announced plans to hold talks with Iran next week to seek a commitment from Tehran on curtailing its nuclear ambitions.
Source: Reuters
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