Europe Summary and Highlights 26 August

European morning session

The USD was mixed through the European morning, losing ground to the JPY, GBP AUD and CAD, but gaining against the scandis, with EUR/USD and USD/CHF little changed. USD/JPY lost 20 pips to 147.55 and GBP/USD rose 20 pips to 1.34980, while AUD and CAD made marginal gains. EUR/USD was little changed near 1.1640 after an early dip to 1.1610, but EUR/SEK gained 3 figures to 11.17 and EUR/NOK 5 figures to 11.83.

Swedish yields were a little lower after the Riksbank Monetary policy minutes confirmed that further easing was likely this year. The softer EUR may have reflected weaker French consumer confidence and political uncertainty as French Prime Minister Francois Bayrou risks being ousted after he called for a vote of confidence next month over his plans to cut France's public deficit. GBP gains were helped by higher UK yields, as the market pared back UK rate cut expectations.

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.