Although US President Donald Trump’s dismissal of Fed Governor Lisa Cook shocked global markets, the dollar stabilized later in the day.
The dollar index recovered to 98.42 after a drop of up to 0.4% in the morning. The euro 1.1617 and the pound 1.3461 remained flat. The Japanese yen and Swiss franc also showed limited movement.
Trump’s move is seen as a harsh attack on the independence of the Fed. The President had long criticized Fed Chairman Jerome Powell for not lowering interest rates. Cook, however, stated that Trump does not have the authority to remove him from office and announced that he would not resign.
Markets are pricing in an 82% probability of an interest rate cut in September. However, analysts emphasize that economic and political problems in Europe are weakening alternatives against the dollar.
The political crisis in France, in particular, is undermining confidence in the euro. […] […] […] On the other hand, the Chinese yuan is approaching its strongest level in the last month, while Bitcoin rose by 0.5% and Ether by 1.5%.] […]
