Dollar Recovers as Fed’s Cook Defies Trump Ouster Attempt – Asia Market Wrap
The dollar pared most of its losses as Federal Reserve Governor Lisa Cook said she won’t resign after President Donald Trump moved to oust her.
A gauge of the dollar retreated as much as 0.3% and gold rose as much as 0.6% after Trump posted on his Truth Social account that Cook will be removed effective immediately. The greenback then cut some of the losses and gold trimmed gains after Cook said she won’t resign. Asian stocks fell 0.7% and equity-index futures for US and Europe retreated.
The Treasury curve steepened, with a drop in two-year yields reflecting growing speculation of a Fed interest-rate cut as soon as next month, while 30-year yields climbed on concern looser monetary policy would risk fueling inflation. French bond futures opened lower in Asia trading.
Trump’s move adds to the negative sentiment toward US assets, after his tariff war and widening deficit revived a “Sell America” theme earlier this year and Wall Street questioned US exceptionalism. Traders have been seeking alternatives to the dollar, the world’s reserve currency, and Treasuries, and any perception of eroding Fed independence could accelerate that shift.
Trump’s announcement came after the US Department of Justice indicated it planned to investigate Cook, following a criminal referral from Federal Housing Finance Agency Director Bill Pulte alleging that she may have committed mortgage fraud.
That investigation marked the latest in a series of moves by the Trump administration both to increase legal scrutiny of Democratic figures and put pressure on the central bank. Cook said Trump has no authority to fire her, and she won’t quit. Cook’s lawyer, Abbe Lowell, said they plan to take “whatever actions are needed to prevent” Trump’s “illegal action.”
