In case you missed the happenings from earlier in the day:
There’s never a week without Trump drama in this market. If you’re looking at the changes among dollar pairs now though, you might be mistaken into thinking that this was yet another boring summer’s day in European trading.
Trump stirred up emotions and market fears with his announcement but as the dust settles, we know that there will be plenty of legal hurdles to get through if he were to try and remove Cook from her position as Fed governor.
That being said, he still might be able to incapacitate her from her post while the litigation plays out. If things don’t go his way, he may even resort to getting the Supreme Court involved and that itself invites a bit of complication as pointed out here.
As things stand, markets are accepting that Trump is certainly here to challenge the Fed’s independence. But at least for the time being, he’s not able to pull the strings to shape the central bank of his own liking just yet.
But as the Fed’s independence is slowly being chipped away and the bond market is also presenting a bit of a conundrum to broader markets, it might be tough for the dollar to hold out in the medium-term. That especially as Trump will grow more vocal with regards to the former next year when Powell’s term as Fed chair ends in May next year.
