Dollar Trims Weaknesses
The US dollar pared losses after Fed Chair Lisa Cook rejected President Donald Trump's attempt to remove her. The Bloomberg Dollar Spot Index remained virtually unchanged, having fallen as much as 0.3% when news of her removal surfaced over allegations of mortgage document fraud. Through her attorney, Abbe Lowell, Cook emphasized that Trump had no authority to fire her and that she would not resign.
According to Mansoor Mohi-uddin (Bank of Singapore), the weakening of the Fed's independence could have far-reaching consequences: excessive interest rate cuts and a resurgence in inflation could potentially steepen the yield curve (harming long-term bondholders) and weaken the dollar in the long term. Without an independent central bank anchor, the global economy is also more vulnerable to shocks.
In the forex market, USD/JPY held steady at 147.76 after dropping to 146.99. AUD/USD weakened 0.1% to 0.6478; initial gains faded after the RBA minutes hinted at further interest rate cuts within the next year. NZD/USD fell 0.1% to 0.5840, as expectations of the RBNZ cutting interest rates at its two remaining meetings this year mounted and ANZ lowered its third-quarter growth forecast.
Meanwhile, USD/CHF remained virtually unchanged at 0.8059 after a 0.4% drop. EUR/USD rose 0.1% to 1.1630, and GBP/USD remained flat at 1.3456. Investors are now weighing the issue of the Fed's independence while awaiting the release of the next US economic data to gauge the dollar's future direction. (ayu)
Source: Newsmaker.id
