LONDON: The US dollar weakened on Thursday as President Donald Trump began shortlisting potential successors to Federal Reserve Chair Jerome Powell, fuelling expectations of interest rate cuts.
Stock markets diverged and oil prices were a lot steadier as Middle East tensions eased and focus turned back to US trade negotiations.
European equities rose, led by defence companies after NATO countries on Wednesday agreed to ramp up military spending.
Rheinmetall jumped four percent in Frankfurt, while France’s Thales and Britain’s BAE systems each added almost two percent nearing midday.
Asia’s main stock market closed mixed.
“Easing tensions in the Middle East, the potential for rate cuts coming later this year, and stabilising oil prices are helping support a relatively positive outlook for equities,” noted Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Trade deals with US
Trade uncertainty resurfaced as most countries have yet to reach deals with Washington to avoid steep tariffs ahead of a July 9 deadline.
The ceasefire between Iran and Israel still held Thursday and Trump said that he would hold nuclear talks with Tehran next week.
Oil prices extended a mild rebound after tumbling at the start of the week on the ceasefire announcement, according to AFP.
The dollar slid against main rivals after Trump’s latest salvo against Powell by suggesting he was lining up his replacement ahead of an expected departure next year.
The pound on Thursday hit its highest level against the greenback since October 2021.
Since returning to the White House, Trump has constantly hit out at Powell for not cutting US interest rates, questioning his intelligence and stoking worries about the bank’s independence.
“I know within three or four people who I’m going to pick,” Trump told reporters after a NATO summit.
The Wall Street Journal reported that the president may announce a replacement as early as September, with Treasury Secretary Scott Bessent, economic adviser Kevin Hassett and former Fed governor Kevin Warsh among the contenders.
Earlier this week, Powell told lawmakers the bank would assess the impact of Trump’s tariffs on the economy before making a move.
On Wall Street, shares in chip titan Nvidia surged more than four percent to a record high Wednesday, AFP reported.
Key figures at around 1040 GMT
London – FTSE 100: UP 0.4 percent at 8,749.50 points
Paris – CAC 40: UP 0.3 percent at 7,579.84
Frankfurt – DAX: UP 0.8 percent at 23,678.02
Tokyo – Nikkei 225: UP 1.7 percent at 39,584.58 (close)
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 24,325.40 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,448.45 (close)
New York – Dow: DOWN 0.3 percent at 42,982.43 (close)
Euro/dollar: UP at $1.1722 from $1.1656 on Wednesday
Pound/dollar: UP at $1.3743 from $1.3664
Dollar/yen: DOWN at 144.15 yen from 145.32 yen
Euro/pound: UP at 85.29 pence from 85.26 pence
West Texas Intermediate: UP 0.2 percent at $65.05 per barrel
Brent North Sea Crude: UP 0.3 percent at $66.60 per barrel
