Asia Summary and Highlights 26 Aug
Trump announced that he has dismissed Federal Reserve Governor Lisa Cook
Asia Session
USD slumped across board on the headline that Trump has dismissed Federal Reserve Governor Lisa Cook. The concern remains on Fed's independence as it is the first time Trump actually do something, instead of verbal jabs. While there seems to be a legal reason for Trump's act, market's focus is on Trump's replacing a governor who will be tilted towards cutting rates. USD/JPY dipped to a low of 146.98 before retracing all losses to 147.78, up 0.01% for the day.
The broader risk sentiment is sour after the fiasco of Trump firing Fed's Cook. Fed governor Lisa Cook is unlikely to comply and is challenging the legality of such action. The RBA August minutes is being read to be dovish as they say "Some further reduction in cash rate likely to be needed in coming year". The AUD/USD is trading 0.07% lower at 0.6478, NZD/USD is trading 0.16% lower at 0.5840 while USD/CAD slips 0.04%. Else, EUR/USD is up 0.12% while GBP/USD is unchanged from Monday's close.
European and North American sessions
European trade was subdued with the UK on holiday, with EUR/USD stable near 1.17 and USD/sustaining its Asian move above 147. August’s German IFO Business Climate index was slightly stronger at 89.0 from 88.6. In North America US July new home sales were stronger than expected at 652k, down 0.6% from June which was revised up to 656k from 627k.
In France PM Bayrou said he would call a confidence vote on September 8 over the budget, lifting French yields and weighing on the EUR. Comments from opposition parties suggested the vote was likely to see Bayrou defeated. EUR/USD slipped to near 1.16, EUR/JPY fell to 171.60 from 172.50 and EUR/GBP fell to .8630 from .8665. Late in the session the USD made broader based gains, USD/JPY rising to 147.85 and GBP/USD falling to 1.3450 from above 1.35.