“Cook’s removal is dollar negative as it would create another opening for President Trump to appoint a new Governor who may be more inclined to support interest-rate cuts,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “It further challenges the independence of the FOMC that underpins the safe haven status of the dollar, which can in turn lead to more dollar selling.”
The treasury yield curve steepened after President Donald Trump moved to oust US Federal Reserve (US Fed) Governor Lisa Cook from her post, denting sentiment toward the world’s reserve currency.
Two-year yields fell after Trump sought to remove Cook following allegations that she falsified documents on mortgage applications, on speculation the US Fed will cut interest rates as soon as next month. The yield on the 30-year climbed on concern looser monetary policy would risk fueling inflation. The Bloomberg Dollar Spot Index slipped.
