The dollar slid to multi-year lows as political uncertainty, tariff threats and concerns over Fed independence deepened the market’s “sell America” trade.
Summary:
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U.S. dollar hits four-year low as losses extend for fourth session
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Trump comments reinforce perception Washington tolerates weaker dollar
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Trade threats and shutdown risks add to U.S. policy uncertainty
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USD/JPY slips below 153; sterling hits multi-year high
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Focus turns to Fed meeting and political fallout, not rates decision
The U.S. dollar slid to a four-year low against a basket of major currencies as fresh political noise from Washington reinforced expectations that U.S. policymakers are comfortable with further currency weakness. economic governance. Analysts pointed to renewed doubts over Federal Reserve independence, heightened trade tensions, and growing political dysfunction in Washington as reinforcing a broader “sell America” narrative that has lingered in markets for much of the past year.
Trade policy has again emerged as a focal risk. Trump accused South Korea of failing to uphold its trade commitments and announced plans to raise tariffs on key imports, including autos, lumber and pharmaceuticals, to 25%. He also warned of punitive tariffs on Canada should it proceed with a trade deal involving China. Analysts said the renewed tariff threats add to uncertainty around U.S. growth, inflation and capital flows.
Concerns over another potential U.S. government shutdown have also resurfaced amid partisan disputes over funding, further undermining confidence in the policy outlook. In Asia, the Korean won strengthened sharply, reflecting both broad dollar weakness and sensitivity to shifting U.S. trade rhetoric.
Markets are now turning their attention to the Federal Reserve’s policy meeting. While a hold on rates is widely expected, analysts said the key risk lies in political reaction rather than the decision itself. Any escalation in pressure on the central bank or moves to reshape Fed leadership could further unsettle markets, leaving the dollar vulnerable in the near term
