Trump Walks Back Powell Attacks: “No Intention to Fire the Fed Chair
In a surprising reversal, President Donald Trump said Tuesday he has "no intention of firing" Federal Reserve Chair Jerome Powell — just days after unleashing a string of public attacks criticizing Powell's rate stance and even suggesting his termination "cannot come fast enough."
“I never did have the intention,” Trump told reporters, brushing off prior remarks. “The press runs away with things. I just want to see him be a little more active on lowering interest rates.”
Trump’s comments mark a shift in tone after a week of escalating pressure on Powell. Last Friday, Trump said, “If I want him out, he’ll be out real fast,” while White House adviser Kevin Hassett confirmed the administration was exploring legal grounds to remove him.
Adding fuel to the fire, Trump on Monday called Powell a “major loser” on his Truth Social platform, accusing him of risking economic slowdown by not delivering “preemptive” rate cuts.
Despite the rhetoric, Powell has reiterated that he intends to serve through the end of his term in May 2026 and cannot be removed without cause. A case before the Supreme Court now questions the president’s power to remove board members of independent agencies — though Powell has said that ruling likely won’t apply to the Fed.
Meanwhile, Fed officials continue to back Powell and emphasize the need for independence. Minneapolis Fed President Neel Kashkari said Tuesday that central bank autonomy is essential for economic stability. Fed Governor Adriana Kugler echoed the sentiment, stating she supports holding rates steady due to inflation risks fueled by rising tariffs.
“The economy is facing heightened uncertainty,” Kugler said, pointing to increased market volatility and potential downside risks to growth.
Despite the political tension, markets remain on edge. Stocks slipped earlier this week as investor anxiety rose over the Fed’s independence and the policy path ahead.
NZD/USD Rises to 5-Month High as Trade Deal Hopes Boost Kiwi
The New Zealand Dollar (NZD) climbed to its highest level since early November 2024, with NZD/USD trading near 0.5980 during Wednesday’s Asian session. The move comes amid renewed optimism surrounding US-China trade relations.
US Treasury Secretary Scott Bessent struck a conciliatory tone on Tuesday, saying the ongoing trade war with China is "unsustainable" and expressing hopes for a "de-escalation" soon. His comments helped calm market nerves and lifted demand for the Kiwi — often seen as a proxy for Chinese economic sentiment due to close trade ties between New Zealand and China.
However, Bessent also noted that formal talks between the two nations have not yet begun. The backdrop includes steep tariffs: 145% from the US and 125% from China, sparking concern about long-term growth and inflationary headwinds for the US economy. These fears, in turn, are putting pressure on the US Dollar and offering short-term support to NZD/USD.
Looking ahead, traders will eye the release of April’s preliminary US S&P Global Manufacturing and Services PMIs for fresh directional cues.
Despite the positive sentiment, the upside for NZD may be limited. Markets are pricing in further rate cuts by the Reserve Bank of New Zealand (RBNZ), following this month’s 25 bps cut to the Official Cash Rate (OCR), now at 3.5%. With inflation still elevated, the RBNZ’s dovish stance suggests it’s prioritizing growth — a signal that could keep a lid on NZD’s rally in the near term.
AUD Holds Ground as PMI Signals Steady Growth, Trump Calms Fed Concerns
The Australian Dollar (AUD) is holding firm around 0.6390 on Wednesday, recovering from recent losses after upbeat economic data and calmer signals from the US helped stabilize investor sentiment.
Australia’s Judo Bank PMI revealed that private sector activity grew for the seventh consecutive month in April, with both manufacturing and services remaining in expansion territory. The Manufacturing PMI dipped slightly to 51.7, and the Services PMI eased to 51.4, but the overall Composite PMI still indicated ongoing growth—an encouraging sign for the Aussie economy.
The Australian Dollar also found support after US President Donald Trump reassured markets that Fed Chair Jerome Powell would remain in his role, easing worries about central bank independence. Meanwhile, US Treasury Secretary Scott Bessent struck a more dovish tone on tariffs, calling the US-China trade war “unsustainable” and hinting at a shift toward de-escalation.
Trump further fueled optimism by stating that tariffs on Chinese goods would not be as high as feared, and the White House confirmed progress on multiple new trade deals. Talks are now ongoing with over 30 countries, aiming to ease the burden of broad import tariffs introduced earlier this month.
In economic news, US inflation data showed some signs of cooling. March CPI eased to 2.4% YoY, below expectations, while core CPI fell to 2.8%. Despite this, Fed Governor Adriana Kugler noted that high tariffs could still push prices higher, suggesting the Fed may keep rates on hold for now.
Back in Australia, the Reserve Bank of Australia (RBA) is still weighing its next move. Minutes from the March 31–April 1 meeting showed no pre-commitment to a rate decision in May, with the board acknowledging both upside and downside risks.
Technical Outlook:
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Immediate resistance: 0.6439 (April high)
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Next resistance: 0.6515 (5-month high)
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Support levels: 0.6350 (9-day EMA), 0.6295 (50-day EMA)
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Trend bias: Bullish, supported by RSI above 50 and price action above EMA
With China’s Q1 GDP growth hitting 5.4%, surpassing expectations, the Aussie may continue to ride positive sentiment—provided global trade tensions don’t flare up again.
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