The markets do not welcome any hint that the Fed's independence is threatened

The US dollar retreated on Thursday, giving up some of its big gains made yesterday, after US President Donald Trump backed off his threats to dismiss the head of the Federal Reserve, and appeared to soften his stance towards China.

Goldman Sachs chief economist Jan Hatzius believes that the dollar will witness a significant devaluation, and it is almost certain that the decision of non-American investors to reduce their purchases of dollars, while hesitating to increase their investments in the United States, will therefore lead to a significant devaluation of the dollar.

UBS also noted that the problem of the US economy lies in the growing uncertainty, not rising interest rates.

UBS warned that Trump's renewed calls to cut interest rates could further erode confidence in the Fed's independence, and that the impending slowdown in the US economy is driven more by rising uncertainty than restrictive monetary policy.

It is not the level of interest rates that hinders investment and consumption, as Trump says, but the growing danger surrounding the economic outlook that throws its greatest weight.

With increasing uncertainty, even modest borrowing costs may not be enough to stimulate spending or capital investment.

In the current environment, it is uncertainty, not interest rates, that is causing damage to the economy.