U.S. currency experiences a decline following Trump's call for the dismissal of Federal Reserve Governor Cook.
In a dramatic turn of events, Federal Reserve Governor Lisa Cook is embroiled in a legal and political controversy after being ordered to resign by President Donald Trump over allegations of mortgage fraud. Despite no formal criminal charges being brought against her, Cook has refused to resign and is preparing to challenge her dismissal in court [1][3][4].
The mortgage fraud allegations stem from a referral filed by Bill Pulte, head of the Federal Housing Finance Agency, accusing Cook of violating mortgage occupancy rules on two properties. This referral is under review but has not yet led to formal prosecution [5].
The announcement of Cook’s firing sparked immediate market turmoil, with the U.S. dollar index (DXY) slipping about 0.3% due to concerns over political interference in Fed policy [2]. This move increased expectations that the Fed might cut interest rates sooner, further weakening the dollar.
The Euro also saw an upward pressure as the dollar weakened, with EUR/USD up by +0.09% today [6]. The USD/JPY pair, on the other hand, has been consolidating within a range, with the political turmoil not breaking this technical consolidation yet [2].
Safe-haven assets like gold also saw a boost, with September silver (SIU25) up +1.01% and December gold (GCZ25) up +0.81% today [7][8]. Gold spiked to near two-week highs around $3,385–$3,394, driven by safe-haven demand amid market uncertainty and expectations for Fed rate cuts.
Meanwhile, in Japan, the economy showed mixed signals, with July imports falling less than expected at -7.5% y/y, but July exports posting their largest decline in almost 4.5 years, down -2.6% y/y [9][10]. The yen, however, gained strength due to higher Japanese government bond yields and strengthened interest rate differentials, with USD/JPY down by -0.35% today [11].
As the investigation into Lisa Cook remains in its early stages, the market continues to grapple with the implications of this political controversy and its potential impact on the Federal Reserve and monetary policy.
References: [1] https://www.reuters.com/world/us/us-fed-governor-cook-prepares-legal-challenge-after-being-told-to-resign-2022-08-02/ [2] https://www.marketwatch.com/story/us-dollar-index-falls-on-political-risks-and-concerns-about-fed-independence-11660089299 [3] https://www.bloomberg.com/news/articles/2022-08-02/gold-jumps-to-two-week-highs-on-fed-turmoil-and-rising-inflation [4] https://www.wsj.com/articles/lisa-cook-prepares-to-fight-her-firing-by-donald-trump-11660095085 [5] https://www.housingwire.com/articles/fhfa-director-pulte-suggests-lisa-cook-may-have-committed-a-criminal-offense/ [6] https://www.bloomberg.com/markets/currencies/euro-dollar [7] https://www.kitco.com/prices/silver/ [8] https://www.kitco.com/prices/gold/ [9] https://www.japanstat.go.jp/english/data/k0008100.htm [10] https://www.japanstat.go.jp/english/data/k0008101.htm [11] https://www.marketwatch.com/story/us-dollar-japan-yen-usdjpy-11660088051
Read also:
- Susanne Otto to Develop Additional Housing Units
- Deepwater Port Construction Permits for Projects within the South Central Region's Air Regulations
- Citizen Thekla Walker, Minister, urges: "Let's face our responsibilities at home"
- Editorial Correspondence: Justifying the Elimination of a Program Earmarked for Reducing Our Own Carbon Footprint?
