Asian currencies and the U.S. dollar traded cautiously on Tuesday as investors weighed fresh concerns over the Federal Reserve’s independence. The tension followed President Donald Trump’s unprecedented decision to fire Fed Governor Lisa Cook.
The U.S. Dollar Index, which tracks the greenback against six major peers, slipped 0.1% in Asian hours. Earlier losses were partly trimmed, but sentiment remained weak. Dollar Index Futures also dipped 0.1% as of 04:02 GMT.
Trump dismisses Cook on fraud allegations
On Monday night, Trump announced via social media that he had removed Lisa Cook from her position, citing allegations of mortgage fraud. According to the claims, Cook allegedly listed two homes as primary residences in 2021 to secure favorable loan terms.
The Federal Housing Finance Agency (FHFA), under the leadership of Trump ally Bill Pulte, referred the case to the Justice Department for investigation.
Cook, who was appointed in 2022 by former President Joe Biden, strongly denied the allegations. She argued that the president lacked the authority to dismiss her, calling the move a threat to the Fed’s constitutionally protected independence, the Washington Post reported.
This dispute has increased global market uncertainty, with investors worried about the political influence over U.S. monetary policy. The dollar stayed subdued, reflecting concerns about the Fed’s credibility and future direction.
Asian currencies remain steady; RBA minutes eyed
The Japanese yen briefly strengthened but later gave up gains, leaving the USD/JPY pair 0.1% lower.
In China, the onshore yuan (USD/CNY) traded flat, while the offshore pair (USD/CNH) slipped 0.1%.
The Australian dollar (AUD/USD) also dipped 0.1% after the Reserve Bank of Australia’s August meeting minutes signaled that more policy easing could be required in the coming year.
Elsewhere, the South Korean won (USD/KRW) edged 0.1% higher, while the Singapore dollar (USD/SGD) held steady. The Indian rupee (USD/INR) gained 0.2% ahead of a new 25% U.S. tariff on Indian goods starting August 27, linked to India’s purchases of Russian oil.
