Global Financial Markets React to Trump-Fed Conflict Escalation

Market Volatility Intensifies

The escalating conflict between US President Donald Trump and Federal Reserve Chairman Jerome Powell has triggered significant global market volatility. Gold prices surged to record highs above $4,600 per ounce as investors sought safe-haven assets ¹

. The US dollar weakened against major currencies, with the Swiss franc appreciating 0.4% to 0.7979 per USD and the euro rising 0.17% to $1.1656 ³

Source 3

https://internasional.kontan.co.id/news/konflik-trumppowell-memanas-dolar-as-melemah-dan-saham-global-berfluktuasi

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Financial Market Reactions

• US stock futures declined, with S&P 500 futures dropping 0.5%-0.6% ahead of market open ¹
  Source 1

  https://internasional.kontan.co.id/news/harga-emas-melejit-pasar-global-gonjang-ganjing-usai-trump-serang-the-fed
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  Source 3

  https://internasional.kontan.co.id/news/konflik-trumppowell-memanas-dolar-as-melemah-dan-saham-global-berfluktuasi
• The VIX volatility index recorded its largest single-day increase since November ¹
  Source 1

  https://internasional.kontan.co.id/news/harga-emas-melejit-pasar-global-gonjang-ganjing-usai-trump-serang-the-fed
• Global markets experienced heightened volatility as investors reacted to the developing conflict between the White House and the Federal Reserve

Background of the Conflict

The tension between Trump and the Fed escalated when Powell revealed that the administration had issued a subpoena with criminal implications related to his Congressional testimony about the Fed's building renovation project ²

. Trump has been pressuring the Fed to cut interest rates more aggressively and has previously considered firing Powell. The Fed had recently cut interest rates to 3.5%-3.75% in their previous meeting, marking their third consecutive 25 basis point reduction ²

Source 2

https://finance.detik.com/berita-ekonomi-bisnis/d-8303466/bos-the-fed-ngaku-diancam-trump-siap-diseret-ke-kasus-pidana

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Market Implications

The market reaction reflects growing concerns about the independence of the Federal Reserve and potential political interference in monetary policy. While the immediate impact on interest rates remains uncertain, the situation has injected additional uncertainty into global financial markets at a time when investors are already navigating complex geopolitical developments.