President Donald Trump speaks alongside Secretary of State Rex Tillerson (L) during a Cabinet Meeting in the Cabinet Room at the White House in Washington, DC, December 20, 2017.

President Donald Trump's decision to replace Secretary of State Rex Tillerson with CIA Director Mike Pompeo is moving financial markets, with the biggest reverberation in the currency markets.

The United States Dollar Index, which measures the greenback versus a basket of other currencies, fell as much as 0.24 percent immediately after the report. It last traded down 0.18 percent at 89.74.

Traders are concerned Tillerson's departure is a sign the administration will institute protectionist policies and be more aggressive in negotiating trade relationships with other countries. Tariffs historically led to U.S. dollar weakness during the presidencies of George W. Bush and Bill Clinton.

"Trump just removed another voice of reason," said Keith Underwood, former trader and head of Underwood FX consulting. "Short-term traders took advantage of people's fears over the tariffs and pushed the dollar lower."

The Washington Post first reported the news, which the president quickly confirmed in a tweet.



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