The dollar sank to a three-year low while world stocks notched their second record high in three days as a report that Donald Trump was planning to choose the next Federal Reserve chief early fuelled fresh bets on US rate cuts, Reuters reported.

President Trump said he’s already hunting for a new Federal Reserve chair to replace Jerome Powell and has narrowed his search to “three or four people.” “I know within three or four people who I’m going to pick,” Trump said in response to a question at the NATO summit in the Netherlands, a USA Today report said.

Dollar selling was ongoing as US trading picked up pace after the Wall Street Journal said the U.S. president - who has been urging the Fed to cut rates faster - was toying with the idea of selecting Chair Jerome Powell's replacement in the next few months ahead of his formal departure next May.

It left the greenback down nearly 0.5% on Thursday and more than 10% for the year. If it stays that way in the next few days it will be its biggest first half-of-a-year fall since the start of the era of free-floating currencies in the early 1970s. Wall Street's main markets opened modestly higher, which kept MSCI's record-high world stocks benchmark almost 8% ahead for the year.

European shares were starting to flag, however, given the euro is now at its strongest level since 2021 and trade tariff talks are looming with Washington next week, ahead of a Trump-imposed global deadline of July 9."The striking thing on the dollar trend of the last six weeks is that in almost any market regime the dollar is struggling to appreciate," State Street's Michael Metcalfe said.       

     -REUTERS