Political interference risks undermine USD outlook – BBH

USD and 10-year Treasuries weakened after President Donald Trump said he was firing 'for cause' Fed Governor Lisa Cook effective immediately, BBH FX analysts report.

Cook rejects Trump’s dismissal order, vows to stay

"Cook responded that Trump has no authority to fire her, and she won’t quit. The USD pullback proved short-lived, with the greenback a little firmer versus most major currencies, as Trump’s effort to remove Cook was already in motion since mid-August, BBH FX analysts report."

"Regardless, political interference with the Fed’s independence spell trouble for the dollar. Cook's exit from the Fed ultimately gives Trump greater opportunity to tighten his grip on the central bank by appointing a replacement aligned with his dovish monetary policy agenda."

"A handful of second-tier US economic data are due today*: August Philadelphia Fed non-manufacturing activity; July durable and capital goods orders; June FHFA house price index; June S&P CoreLogic 20-city and US HPI; August Richmond Fed manufacturing index and business conditions; August Conference Board consumer confidence; August Dallas Fed services activity. We also get a fresh update of the Atlanta Fed GDPNow model later today. As of August 19, the model estimates Q3 annualized growth at 2.3%, down from 2.5% on August 15."