The Federal Reserve has held interest rates for the first time since July despite mounting pressure from Donald Trump to slash borrowing costs.

Rates were held at the 3.5pc to 3.75pc range, as expected, following a succession of cuts at meetings in September, October and December last year.

The decision to keep rates steady is likely to enrage Mr Trump, who has repeatedly called Fed chairman Jerome Powell a “numbskull”, a “stubborn moron” and “Mr Too Late” for not slashing borrowing costs, which Mr Trump has said should be as low as 1pc.

Last month, the Federal Open Markets Committee voted to lower rates to a three-year low - to 3.5pc to 3.75pc - in response to fears about rising unemployment and a weaker jobs market.

Mr Powell on Wednesday said that although inflation remains “somewhat elevated”, the US economy is on a “strong footing” and unemployment was stabilising.

However, he warned that the housing market “remained weak”.

Rising tensions between Mr Trump against Mr Powell have stoked fears over the Fed’s independence after stringent attacks by the President.

Earlier this month, the Department of Justice opened a criminal investigation into Mr Powell in an unprecedented move that the Fed chair said was a “pretext” to try to restrict the central bank’s independence.

US prosecutors served the Fed with grand jury subpoenas over the central bank’s $2.5bn renovation of its headquarters, which has run over budget.

The Fed chair said that the real reason for the investigation was because the central bank was not setting interest rates “following the preferences of the President” and warned of “political pressure or intimidation”.

Central bank governors around the world as well as former Fed chief and Treasury secretaries raced to condemn the investigation.

Lord King, the former Bank of England Governor, on Wednesday suggested that Mr Trump’s attacks on the Fed were putting the US economy at risk of a “deep recession”.

“I do think that the current situation is a challenge for central banks everywhere, because you see it in the remarks being made in the US now [like] ‘We don’t have an inflation problem’ [even though] inflation is above their target,” he told a Centre for Policy Studies event.

“This is the route by which inflation creeps up gradually, and then you find yourself with a problem which only a deep recession can solve.”

The investigation into Mr Powell comes after Mr Trump tried to sack Fed governor Lisa Cook over unproven allegations of mortgage fraud, a move that she is contesting in the Supreme Court.

Speaking on Wednesday, Mr Powell said that the court battle “is perhaps the most important legal case in the Fed’s 113-year history”.

He defended his decision to appear with Ms Cook at the Supreme Court last week after being criticised by Treasury secretary Scott Bessent for making a “mistake” with his appearance.

“I thought about it, I thought it might be hard to explain why I didn’t attend,” Mr Powell said.

Mr Powell is due to step down from his position in May, meaning he is likely to oversee two more rate decisions before a new Fed chairman is named by Mr Trump.

09:51pm

Thanks for joining us. That’s all we have for today.

The Federal Reserve voted to hold interest rates at the 3.5pc to 3.75pc range – which was widely expected.

US stocks wavered in response to the news, with the S&P 500 paring back gains that led the index to surpassing 7,000 points for the first time earlier in the session.

The dollar fell to a four-year low after Donald Trump threatened to attack Iran again.

08:15pm

Asked what his advice would be for his successor as Fed chair, Mr Powell said: “Stay out of elected politics. Don’t get pulled into elected politics. Don’t do it.”

08:08pm

US households are cutting back on spending as they grapple with an affordability squeeze, Jerome Powell has warned.

The Fed chair said: “For a year or more, we’ve been hearing from retailers, for example, who serve lower income customers - whether it be food or the big box stores - they’re saying the same thing, which is ‘our consumers are looking to economise. They’re trading down from brands, and they’re buying less and changing their buying habits and that kind of thing’.

“We’re seeing that, and that’s the reality of what we’re seeing. They’re still consuming but, but they’re feeling it in a different way.

“We do hear a lot about affordability, and we that very seriously, and we take it to heart.”

08:03pm

If countries lose central bank independence it will be hard to restore credibility, Jerome Powell has warned.

The Fed chair said: “It would be hard to restore the credibility of the institution, if people lose their faith that we’re making decisions only on the basis of our assessment of what’s best for everyone, for the wider public, rather than trying to benefit one group or another. If you lose that, it’s going to be hard to retain it.

“And we haven’t lost it. I don’t believe we will. I certainly hope we won’t, but it’s very important, and the reason it’s important is that it’s enabled central banks generally not to be perfect, but to serve the public well.”

He added: “I’m strongly committed to that, and so are my colleagues.”

08:02pm

US stocks have wavered after the Federal Reserve announced it was holding interest rates.

The S&P 500 declined 0.1pc to 6,970 points following reaching 7,000 points for the first time earlier in the trading session and the Dow Jones Industrial Average fell by close to 0.1pc to 48,972 points.

Meanwhile, the tech-heavy Nasdaq Composite was up 0.3pc to 23,884 points.

07:57pm

Policymakers must work to bring down America’s large fiscal deficit, Jerome Powell has warned.

The Fed chair said: “The US federal budget deficit is uncontroversially on an unsustainable path.

“The sooner we work on it, the better. Right now, we’re running a very large deficit at essentially full employment. And so the fiscal picture needs to be addressed and it’s not really being addressed. That’s important.”

07:52pm

Support for keeping interest rates on hold was “broad” across the Federal Open Markets Committee (FOMC), Fed chair Jerome said.

He added: “We still have some tension between employment and inflation, but it’s less than it was.”

At previous meetings, Mr Powell has warned that the Fed has been pulled in opposite directions by its dual mandate of maximum employment and bringing inflation to its 2pc target.

07:49pm

The US economy is on a “solid foot”, according to Fed chair Jerome Powell.

He said: “Everything comes in suggesting that this year starts off on a solid foot for growth. Inflation performed about as expected, and as I mentioned, some of the labour market data came in suggesting evidence of stabilisation. So it’s overall, a stronger forecast.”

07:47pm

Federal Reserve Chair Jerome Powell declined to say whether the central bank has responded to the Department of Justice’s subpoenas.

“I have nothing for you on that today,” Mr Powell said.

He also declined to comment on whether he has decided to stay on as governor after his term as chair expires in May.

07:42pm

Federal Reserve Governor Lisa Cook’s Supreme Court case is perhaps the most important legal case in the central bank’s history, according to its Jerome Powell.

Asked why he attended Ms Cook’s hearing this month, Mr Powell said: “I would say that that case is perhaps the most important legal case in the Fed’s 113-year history. And I thought it might be hard to explain why I didn’t attend.”

Ms Cook is fighting president Donald Trump’s attempt to sack her from the board of governors over allegations of mortgage fraud.

07:33pm

More interest rate cuts from the Federal Reserve are “unlikely” for the next few meetings, according to Capital Economics.

Stephen Brown, of the consultancy, said that the Fed’s messaging suggests that the central bank is “unlikely to cut interest rates again for at least a couple more meetings.”

The Federal Open Markets Committee (FOMC) said: “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”

Previously, the FOMC had described economic growth as “moderate” and had warned about a weak jobs market.

07:32pm

The dollar’s rise since earlier today has continued after the Federal Reserve votes to hold interest rates at 3.75pc.

The dollar index, which measures the strength of the US currency against a basket of other currencies, rose 0.4pc to 96.64.

Meanwhile, the yield on the US’s 10-year treasury bond edged higher to 4.26pc.

It follows the US dollar previously falling to a 4-year low after Donald Trump threatened to attack Iran again.

07:22pm

There were two dissenting votes against the Federal Open Market Committee (FOMC)’s vote to hold interest rates at 3.75pc.

Governors Stephen Miran and Christopher Waller both voted for an additional 0.25 percentage cut to the federal funds rate.

Mr Miran was appointed to the board by Donald Trump after Governor Adriana Kugler stepped down early in August and has previously advocated for larger 0.5 percentage point cuts.

Mr Waller is reportedly being considered by the president as a candidate to replace Jerome Powell as Fed chair when his term ends in May.

07:17pm

The next time the Federal Reserve cuts interest rates is likely to be a few meeting away because of inflation, Quilter Cheviot said.

Richard Carter, of Quilter Cheviot, wrote in a note: ““Following several cuts last year and the delayed nature of their impact on the real economy, it makes sense that the Federal Reserve has chosen to hold rates at its first meeting of 2026.

“This is likely to be a pivotal year for the Fed and its future independence, but for now it is happy to defy the President and keep a lid on future rate cuts.

“The US economy is running hot at the moment, and Trump is likely to keep it that way as we head into the midterm elections towards the end of this year.

“The inflation outlook, consequently, is worsening and as such the next cut from the Fed looks to be a couple of meetings away at the earliest.”

06:02pm

Bitcoin has risen after the dollar declined when Donald Trump threatened to attack Iran again.

The cryptocurrency climbed 3pc higher to $90,025 following the US currency slipping to a four-year low.

Meanwhile, Solana is up about 2pc to $126.

05:49pm

The dollar’s decline has dampened returns for UK investors who own shares in US stocks, representing a “hefty tariff”, AJ Bell said.

Danni Hewson, of AJ Bell, wrote in a note: “One of the reasons the dollar has been sliding is failing confidence in the independence of the US central bank.

“The dollar has now fallen to a four-year low, helped along by Donald Trump expressing his approval that the greenback is sinking.

“One of the meaningful effects of a weaker dollar on this side of the pond is to dampen the returns investors are getting from a booming US stock market.

“Over the last year the S&P 500 has risen by 16%, but when converted into pounds and pence that works out as a pedestrian 5% bump (source FE). That represents a hefty tariff on returns for UK investors.”

04:58pm

Stock indexes in the UK and Europe have fallen as traders await a decision by the Federal Reserve on interest rates and results from three Big Tech names later today.

The FTSE 100 declined 0.5pc to 10,154 points, while the mid-cap FTSE 250 broadly flatlined, closing at 23,391 points.

France’s Cac fell 1pc to 8,067 points and Germany’s Dax was down 0.3pc to 24,823 points at the closing bell.

04:52pm

Wall Street stocks have pared back gains after the S&P 500 reached a new record high earlier in the trading session.

The benchmark stock index rose just 0.05pc to 6,982 points shortly before noon in New York, having surpassed 7,000 points as a weaker dollar boosted share prices.

The Dow Jones Industrial Average climbed about 0.07pc to 49,030 points and the tech-heavy Nasdaq Composite declined 0.1pc to 23,793 points.

It comes before the Federal Reserve’s meeting later today, where interest rates are expected to be held. Investors are also awaiting results from Meta, Microsoft and Tesla in the next few hours.

04:29pm

The West Texas Intermediate (WTI) reached a four-month high hours after Donald Trump threatened another attach on Iran.

The oil rose almost 1pc to just over $63 a barrel, extending gains in the past month to 10pc.

Meanwhile, Brent crude hovered around $67 a barrel, having peaked above $68 earlier in the day.

04:12pm

US Treasury Secretary Scott Bessent said the the policies introduced by the Trump administration are helping to make the US the “best place to come” to build a business.

“The US always has a strong dollar policy — but a strong dollar policy means setting the right fundamentals,”  Mr Bessent told CNBC in an interview. “If we have sound policies, the money will flow in.”

He added: “I think that with President Trump, with the One Big Beautiful Bill, with our regulatory policies, we are making this the best place to come build your business, have tax certainty, regulatory certainty, energy certainty.”

“If we have sound policies, the money will flow in and we are bringing down our trade deficit, so automatically that should lead to more dollar strength over time,” Mr Bessent said.

03:57pm

As the benchmark S&P 500 reaches new record highs amid a week of earnings reports from technology companies, investors’ attention may soon turn back to artificial intelligence (AI).

Jim Reid, of Deutsche Bank, wrote in a note: “The S&P 500 closed at a fresh all-time high last night. What’s striking about the move back to the peak, though, is how much leadership has shifted over the past quarter.

“Over the last three months (since October 29, when tech peaked), Materials (+14.9%), Energy (+13.3%), Consumer Staples (+8.5%), Health Care (+8.0%) and Industrials (+6.5%) are all up more than +5%. Only two of the 11 top-level sectors are down over that period: Utilities (-3.6%) and Information Technology (-5.4%).”

He added that four Big Tech names — Meta, Microsoft, Tesla and Apple — report results over the next 36 hours, but are currently about 10 to 15pc below their recent peaks and account for almost a fifth of the S&P 500.

“With geopolitical noise easing for now — having stolen the limelight from what’s been a relatively quiet year for AI so far — attention may soon swing back to where tech and AI fundamentals really stand,” Mr Reid said.

03:33pm

The dollar’s decline is seemingly part of Donald Trump’s plan to bolster economic growth in the US, according to AJ Bell.

Russ Mould, of AJ Bell, wrote in a note: “President Trump’s indifference to a lower dollar is entirely in keeping with his administration’s apparent plan to talk (or force) down not only the currency, but oil prices and interest rates, all while cutting personal taxes and deregulating in a bid to stoke US economic growth and reduce America’s uncomfortable debt-to-GDP ratio.

“It remains to be seen whether the plan succeeds, but a soggy dollar could decrease the attractiveness of US assets to investors and boost the profile of two portfolio options which have, in the past, shown a liking for a weaker greenback – namely commodities and emerging markets.

“The dollar has consistently headed south since Trump’s second inauguration last year, and it now stands 14% below the high of 110 it reached in January 2025, using the trade-weighted DXY index as benchmark.”

02:31pm

The S&P 500 surpassed the 7,000 mark for the first time as Wall Street brushed off concerns about a weaker dollar.

The flagship US stock market climbed by 0.3pc as the US currency staged a decline from its sharp falls to four-year lows suffered on Tuesday.

Meanwhile, the Dow Jones Industrial Average rose 0.2pc to 49,086.29 and the tech-heavy Nasdaq Composite gained 0.6pc to 23,956.99.

Luca Bindelli of Swiss private bank Lombard Odier said: “A weaker US dollar generally reflects improved global liquidity conditions and tends to support broader risk markets.”

02:13pm

Federal Reserve officials are expected to leave interest rates unchanged after three cuts last year, ignoring huge pressure from Donald Trump for lower borrowing costs.

The central bank’s rate reductions last year were intended to shore up the economy and prevent a sharper deterioration in the job market, after hiring slowed in the wake of the President’s sweeping tariffs.

Yet there are signs that unemployment has stabilised and the economy could be picking up. At the same time, inflation remains stubbornly above the Fed’s 2pc target.

A key issue that chairman Jerome Powell will likely address at his news conference Wednesday is how long the Fed will remain on hold, which would influence the value of the dollar.

The rate-setting committee remains split between those officials opposed to further cuts until inflation comes down, and those who want to lower rates to further support hiring.

In December, just 12 of the 19 participants in the committee’s meetings supported at least one more rate cut this year. Most economists forecast the Fed will cut twice this year, most likely at the June meeting or later.

01:25pm

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The US dollar is in free fall – but Donald Trump claims it is a good thing.

Since January 19, the greenback has plunged by 3.19pc against a basket of other currencies and is now at a four-year low. On Tuesday alone, it fell again by almost 1pc.

“I think it’s great,” the US president said at an event in Iowa yesterday. “Look at the value of the dollar. Look at the business we are doing. The dollar is doing great.”

His words added further fuel to investor concerns that the Trump administration is keen to weaken the dollar as a way to reduce America’s trade deficit.

12:39pm

Gold remained above $5,200 as the decline of the dollar signalled “falling confidence” among investors.

Bullion typically rises at times of uncertainty as it is perceived as a safe-haven asset.

Rhona O’Connell, an analyst at StoneX, said: “Gold is in a furious gallop and a weaker dollar is only part of the story.

“Dollar weakness in and of itself is not an automatic support for gold (sometimes they move in the same direction) but this time it has helped, because it is a signal of failing confidence – and the President’s comments have further spooked the financial markets.

“Gold is in its own self-fulfilling momentum, but this has fanned the flames.”

12:08pm

The Federal Reserve will not cut interest rates as Donald Trump’s latest tariff tirade threatens to increase inflation, an asset manager has said.

Christophe Boucher, chief investment officer at ABN AMRO Investment Management, said there is “no justification for an additional rate cut as consumer spending remains very resilient, and productivity has risen sharply”.

He added: “Geopolitical uncertainty has increased somewhat at the start of the year, and Trump has resumed his threats regarding new tariffs.

“A new wave of US tariffs could keep inflation above target for longer.”

The Fed is expected to keep interest rates at their range of 3.75pc to 3.5pc, tempering the sell-off that has hit the dollar this year.

11:40am

US stocks were higher in premarket trading despite the plunge in the dollar.

Nvidia climbed 1.7pc, Intel jumped 6.6pc, and Micron and Microchip Technology each gained over 5pc in the wake of strong earnings in Europe and Asia.

South Korean chip giant SK Hynix, a key Nvidia supplier, reported a record quarterly profit, while Dutch equipment maker ASML booked its highest ever fourth-quarter orders.

After the closing bell later, Meta, Microsoft and Tesla will report their latest results, kicking off the so-called “Magnificent Seven” earnings season. The stocks have driven the AI trade which has powered markets to record levels.

It all combined to help traders brush off concerns about a weakening dollar and the US Federal Reserve meeting later today, where policymakers are expected to keep interest rates on hold.

In premarket trading, the Dow Jones Industrial Average was up 0.1pc, the S&P 500 gained 0.4pc and the Nasdaq 100 was up 0.9pc.

11:14am

The FTSE 100 and European markets were down in the run-up to the Federal Reserve’s decision on interest rates.

The UK’s flagship index, where most companies measure their results in dollars, was down 0.4pc in the wake of the US currency hitting a four-year low.

European shares were also down as luxury shares slid 3.2pc, marking their fourth consecutive day of losses.

Shares of LVMH, the owner of Louis Vuitton and Tiffany, dropped 7.3pc ‍after chief executive ‌Bernard Arnault said he was cautious about the year ahead.

The Cac 40 in Paris was down 0.9pc and the Dax in Frankfurt down 0.2pc even as tech stocks rose 1.6pc to their highest in more than 25 years.

It came as ASML reported stronger-than-expected bookings for the fourth quarter, highlighting resilient AI demand. Shares of the world’s largest supplier of computer chip equipment hit a record high and were last up 4.3pc.

Investors are ‍now awaiting the US Federal Reserve’s policy decision later in the day. The central bank is widely expected to ⁠hold interest rates steady, but traders will look out for any comments on threats to ​its independence, which could send the dollar even lower.

10:43am

The price of oil hit a four-month high as the weaker dollar made it cheaper to buy the commodity.

Brent crude rose by more than 3pc on Tuesday and peaked above $68 a barrel earlier today as the US currency tumbled to a four-year low.

Oil has also been boosted after Donald Trump said on Tuesday that he was sending a “big armada” to the Middle East following protests against the regime in Iran.

Warren Patterson, an analyst at ING, said: “The sell-off in the US dollar is providing a boost to oil, along with lingering concerns over Iran.”

Brent, the international benchmark, was last down in London trading hours as the dollar bounced back from its overnight sell-off.

It was last down 0.6pc near $67. It dropped below $60 earlier this year following the capture of Venezuelan leader Nicolás Maduro.

10:22am

The dollar faces “lots of downside” as the effects of the Greenland crisis begin to seep through into markets, an economist has said.

Robin Brooks, a former chief economist at the Institute of International Finance (IIF), said the decline in the US currency was a reaction to a “poorly handled policy event”.

He said there werte echoes of the rollout of reciprocal tariffs in April last year, when the dollar sank by 6pc.

He said: “The current sell-off is less than half that, so there’s still lots of downside.

“President Trump’s imprimatur means we’re likely to get there a lot quicker, even with a Fed that’s on hold today and maybe even leans hawkish after recent attacks on its independence.”

He added: “Markets don’t like the Greenland confrontation because they think it hurts growth.”

09:58am

The European Central Bank could cut interest rates again this year after the euro’s sharp increase in value against the dollar, economists said.

Eurozone policymakers have held the deposit rate at 2pc since June last year after inflation was brought back below the bloc’s 2pc target.

The currency jumped by 2.2pc against the dollar so far this year, rising above $1.20 for the first time since 2021.

Jack Allen-Reynolds of Capital Economics said the rise would “reduce eurozone inflation by a trivial amount, so for now the ECB is likely to do nothing to prevent it other than perhaps the mildest form of verbal intervention”.

However, he said if the euro “rose gradually” to between $1.25 and $1.30 over the next three years, it would reduce headline inflation by 0.3 percentage points in 2028.

He added: “Further euro appreciation would raise the chance of the ECB cutting interest rates this year.”

09:43am

Donald Trump wants to “run the US economy even hotter in 2026” as he seeks a boost ahead of the mid-term elections, analysts said.

The US president sent the dollar sharply lower as he appeared unperturbed by its decline against major peers this year.

Michael Brown, an analyst at Pepperstone, said the world’s largest economy was already on track for a boost from the One Big Beautiful Bill Act, which includes tax refunds and R&D expensing for businesses.

Meanwhile, the effect of the Federal Reserve cutting interest rates three times at the end of last year will also feed through.

It is a pivotal year for the Trump administration, as a loss in the mid-term elections could hamper its policy plans.

Mr Brown said: “2025 was the year of ‘run it hot’ when it comes to the US economy; 2026 looks like it’ll be the year of ‘run it even hotter’, if the Trump Admin’s early policy pronouncements are anything to go by.”

09:21am

The dollar has suffered its biggest weekly fall since last April on Wednesday after Donald Trump brushed off this month’s slide.

The President’s comments sent the US currency even lower ⁠against the euro, yen and pound ahead of the Federal Reserve interest rate decision later today.

The dollar declined by more than 9pc in 2025 and has started the year on the back foot, already down about 2.3pc against major rivals in January.

It has fallen by 2.8pc since last Wednesday, which is its worst performance since the President launched his “liberation day” tariffs in April last year.

However, the currency has rebounded in early London trading hours.

Sterling was last down 0.5pc to $1.378 having risen as high as $1.387 late on Tuesday, while the euro was down 0.5pc to $1.198, having jumped as high as $1.208.

Mr Trump said on Tuesday the value of the dollar was “great” when asked whether he thought it had declined too much.

Kyle Rodda, an analyst at Capital.com, said the sell-off afterwards showed a “crisis of confidence in the US dollar”.

He said: “It would appear that while the Trump administration ‍sticks with its erratic trade, foreign and economic policy, this weakness could persist.”

09:02am

Gold surged to a record high as the weakness of the dollar fuelled its breakneck rally.

Bullion was up 4.2pc at close to $5,300 an ounce as Donald Trump signalled he was not concerned about the declining value of the currency.

Gold only passed $5,000 an ounce for the first time on Monday. Its value has increased by 22pc in January alone.

Analysts at Saxo Bank said gold had “extended their strong rally with the debasement trade back in sharp focus after Trump was seen talking down the dollar”.

08:33am

The dollar is falling sharply after Donald Trump “undermined confidence” in the US currency, an economist warned.

The US currency has dropped to its lowest level since 2022 against a basket of major currencies including the pound, euro, yen, Swiss franc, Swedish krona and the loonie.

Kallum Pickering of investment bank Peel Hunt said he had expected the dollar to weaken this year as part of a “rebalancing of global capital flows”.

He warned: “However, Trump’s unpredictable approach to policy, including his efforts to put pressure on the Fed for rate cuts, is undermining confidence in the greenback and amplifying the trend – and raising partly-justified worries over a global de-dollarisation trend.

“What matters is the pace of the depreciation. Markets will be able to adjust to a gradual weakening, but sudden large drops that coincide with spikes in US Treasury yields would be a sign of capital flight from the US – and that would be a problem for global risk markets as well as the US economy.”

Some quick thoughts on the renewed dollar weakness

- President Donald Trump has said he is relaxed about the renewed dollar sell-off, which continues the trend of a sharply lower dollar since he took office a year ago. Over the past two weeks, the Bloomberg dollar index has… pic.twitter.com/5cHkAPp0FM

— Kallum Pickering (@KallumPickering) January 28, 2026

08:23am

The FTSE 100 was flat in early trading as it was hit by the declining dollar.

The UK’s flagship stock index stood at 10,207.80 while the midcap FTSE 250 rose by 0.2pc to 23,457.69.

The FTSE 100 tends to perform worse when the dollar is weaker as many of its companies report their earnings in the US currency.

08:08am

The dollar declined sharply as Donald Trump appeared to be at ease with the prospect of a weaker US currency, traders and analysts said.

Analysts suggested the President was taking a “calculated risk” as a weaker dollar would help boost American exporters and would also help bring down the shrink the US trade deficit.

“When the person who could jawbone to defend the currency sounds unconcerned, the perceived backstop under the dollar gets thinner,” said Anthony Doyle, chief investment strategist at Pinnacle Investment Management.

Win Thin, chief economist at Bank of Nassau, said: “The Trump administration is taking a calculated risk.

“Foreign exchange typically is the leader in terms of showing market discomfort with a country’s policies and economic outlook, so this dollar weakness bears watching.”

Stephen Innes of SPI Asset Management said: “This was not a policy signal. It was a presidential shrug — and in foreign exchange, White House indifference moves price faster than easing cycles ever do.”

07:52am

Dollar traders will be keeping an eye on the Federal Reserve’s latest meeting later today as they seek guidance on its plans for interest rates.

Policymakers are widely expected to leave the funds rate at its range of 3.75pc to 3.5pc, with the next reduction not expected until after Jerome Powell departs as chairman in May.

The Fed chairman has been placed under a criminal investigation over renovations to the central bank’s buildings and has been repeatedly attacked by Donald Trump for being too slow to lower interest rates.

The Fed has reduced borrowing costs at each of its last three meetings.

Its next rate decision will be announced at 7pm UK time.

07:40am

The dollar has seen its value drop as the so-called debasement trade sweeps global markets.

Investors are switching to hard assets like gold and other precious metals over fears that inflation, deepening government deficits and lower interest rates by the Federal Reserve will devalue the US dollar and Treasury bonds.

Gold has already climbed 22pc this year, while silver has rocketed by 60pc. Meanwhile, fellow safe-haven currencies have climbed.

Stephen Innes of SPI Asset Management said: “You can see it in the way the capital is rotating. Europe is no longer just a funding leg. Switzerland is no longer just a parking lot. Asia foreign exchange is no longer moving only when Washington gives the green light.

“The tape is telling you the debasement trade has gone from theory to execution.”

07:18am

Thanks for joining me. Donald Trump insisted the dollar was “doing great” as the US currency plunged to a four-year low.

The pound climbed above $1.38 for the first time since October 2021 as the global reserve currency appeared to lose its appeal to investors.

The euro surpassed $1.20 for the first time in more than four and a half years and the Swiss franc rose to a 10-year high.

“No, I think it’s great,” Mr Trump told reporters in Iowa on Tuesday when asked if he was worried about the currency’s drop.

“I think the value of the dollar — look at the business we’re doing. The dollar’s doing great.”

Analysts said the US president’s nonchalance towards its decline accelerated the sell-off to its lowest level against major rival currencies since 2022.

Anthony Doyle of Pinnacle Investment Management said: “When the person who could jawbone to defend the currency sounds unconcerned, the perceived backstop under the dollar gets thinner.”

The Federal Reserve holds its next meeting on rates later today.

The switch away from the dollar has instead pushed investors towards gold and other precious metals.

Bullion was up 4.2pc at close to $5,300 an ounce, having only surpassed $5,000 for the first time on Monday. Here is what you need to know.

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While the US dollar’s rout deepened, Asian shares were mixed after the S&P 500 hit a new record.

Later today, the Federal Reserve will announce its next move on interest rates. The expectation is that it will hold its main interest rate steady for now.

South Korea’s benchmark hit a record, lifted by gains for technology shares like computer chip maker SK Hynix, which climbed 3pc. The Kospi was up 1.3pc at 5,152.14.

Tokyo’s Nikkei 225 index lost 0.5pc to 53,055.58. The dollar rebounded slightly against the Japanese yen but has still weakened sharply since last week, putting pressure on shares of major exporters.

Toyota lost 3pc and other major manufacturers also extended losses.

The dollar was trading at 152.75 yen, up from 152.19 yen. But it’s nearly 4pc lower than its level last week, when it surged to near 160 yen, prompting both Japanese and US officials to warn they will intervene to stanch the yen’s decline.

An index measuring the US dollar’s strength against several of its competitors has dropped to its lowest point since 2022.

The price of gold jumped nearly 3pc to surpass $5,200, and silver’s price jumped 9pc.

On Wall Street, stocks rose on gains in Big Tech and as investors await the latest decision on interest rates by the Federal Reserve.

The benchmark S&P 500 hit a new record high at the closing bell climbing 0.4pc to 6,979 points, while the Dow Jones Industrial Average declined 0.8pc to 49,003 points.

The tech-heavy Nasdaq Composite advanced 0.9pc to 23,817 points.

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