USD flows: USD recovers after initial dip, but...
USD dip on firing of Fed's Cook largely reversed, but negative bias remains
Another fairly quiet calendar with only US durable goods on the data front. The reaction to Trump’s firing of Lisa Cook from the Fed may be the main focus. The USD initially fell back sharply in response but has nearly fully recovered by the end of the Asian session. Reaction reflects market concerns that Trump is intent on interfering with the Fed, but it isn’t clear that her exit will make any significant difference to policy. A September Fed rate cut is now a little over 80% priced in following Powell’s comments at Jackson Hole, but there may be scope for this to be more fully priced, suggesting some downside risks for the USD, particularly against the JPY where yield spreads continue to took JPY positive.
