The move has "fanned worries about a more protectionist and isolationist faction of the president's advisors gaining power within the administration," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Apart from the political revolving door in Trump's cabinet, investors grew concerned again about increased protectionism in his government. Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors, two people who discussed the issue with the Trump administration said on Tuesday.
The news comes before a G20 meeting next week where the world's leaders will pledge to fight unfair trade practices and stress the role of global trade rules.
On the economic front, U.S. retail sales data on Wednesday did not really help the dollar. Retail sales fell, offsetting a stronger-than-forecast rise in domestic producer prices last month. That should further prompt the Federal Reserve to raise interest rates at a gradual pace. The market still expects the Fed to raise rates three times this year, starting at next week's monetary policy meeting.
"Retail sales have been weak for some time, suggesting it was not weather-related," Stifel chief economist Lindsey Piegza told the Reuters Global Markets Forum chat room on Wednesday. "As such, the Fed has to consider the possibility of a weaker growth ahead."