2025-08-26 09:46

Trump fires Governor Cook amid push for more influence at Fed Dollar steady after stumbling on Trump's announcement Cook's removal highlights worries over Fed independence French bonds tumble as government faces collapse SINGAPORE/MUMBAI, Aug 26 (Reuters) - The dollar steadied after a volatile start on Tuesday as U.S. President Donald Trump's unprecedented move to fire Federal Reserve Governor Lisa Cook renewed concerns over the central bank's independence. The euro and sterling were little changed against the dollar at $1.1617 and $1.3461, respectively, in line with muted moves in other currencies such as the Japanese yen and Swiss franc . Sign up here. The dollar index , which measures the U.S. currency against six others, was flat at 98.42, recovering from a fall of as much as 0.4% after Trump made the announcement in a letter to Cook that he posted on social media. The move marks a sharp escalation of Trump's battle against the Fed. The president has repeatedly berated Fed Chair Powell for not lowering interest rates, though has stopped threatening to fire him ahead of the end of his term in a little under 9 months. "The story has been well-telegraphed," said Kenneth Broux, head of corporate FX and rates research at Societe Generale, referring to Trump's push for lower benchmark borrowing costs. In the letter, Trump said he was firing Cook over alleged improprieties in obtaining mortgage loans. In response, Cook said Trump has no authority to fire her from the central bank, and she will not resign. Money markets are currently pricing in a near 82% probability of a rate cut at the Fed's September meeting. While investors may be inclined to sell the dollar, lingering economic and fiscal worries in Europe also narrow the available currencies to bet on a decline in the U.S. currency, Broux said. France's government bonds fell as the country's minority government looked increasingly likely to be ousted next month, with main opposition parties saying they would not back a confidence vote announced by Prime Minister Francois Bayrou over his plans for sweeping budget cuts. The 10-year government bond yield rose around 4 basis points to 3.53%, its highest since March. Bond yields move inversely to prices. "The broader question for the euro is whether recent French news destabilises appetite for the euro more broadly, or whether this is an isolated French issue," analysts at ING said in a note. China's offshore yuan changed hands at 7.1635 per dollar , trading near the strongest level in a month, as a stock market rally gathered steam. Cryptocurrencies remained choppy with bitcoin last up 0.5%, attempting to break a three-day losing streak, while ether climbed 1.5%. https://www.reuters.com/world/middle-east/dollar-steadies-after-jolt-trumps-ouster-fed-governor-2025-08-26/

2025-08-26 09:38

Trump says he has cause to remove her but will abide by any court ruling Another open board seat could boost Trump's influence over Fed Market reaction to Trump's uprecedented move on Cook muted Fed meets next to set interest rates on September 16-17 WASHINGTON, Aug 26 (Reuters) - Federal Reserve Governor Lisa Cook will file a lawsuit to prevent President Donald Trump from firing her, a lawyer for the embattled central bank official said on Tuesday, kicking off what could be a protracted legal fight over the White House's effort to shape U.S. monetary policy. "His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action," Cook's lawyer, prominent Washington attorney Abbe Lowell, said in a statement. Sign up here. The statement was issued a day after Trump said he would fire Cook, the first Black woman to serve on the central bank's governing body, for alleged "deceitful and potential criminal conduct" related to mortgages she took out in 2021. Trump's attempt to remove her, unprecedented in the 111-year history of the nominally independent U.S. Federal Reserve Board, is consistent with his style of breaking norms and prompting opponents to challenge him in court. It follows other largely successful efforts to bring other elements of the U.S. government under his direct control. Since returning to office in January, the president has overseen the departure of hundreds of thousands of civil servants, dismantled several agencies and withheld billions of dollars of spending authorized by Congress. "We need people that are 100% above board and it doesn't seem like she was," Trump told reporters at a meeting. He said he had several "good people" in mind to replace Cook but would abide by any court decision that left her in her job. Trump pressured the Fed to lower interest rates during his first term in the White House and he has escalated that campaign in recent months. The president has demanded that rates be cut by several percentage points and threatened to fire Fed Chair Jerome Powell, although he recently backed down from that. Cook's departure would allow Trump to pick a majority of the Fed's seven-member board, including two incumbents and the pending nomination of White House economist Stephen Miran. Trump said he may consider Miran, whom he nominated for a temporary seat on the Fed board that is due to expire in January, for Cook's seat should it become vacant. The Wall Street Journal reported that former World Bank Group President David Malpass, a longtime Trump ally, was also discussed for the job. The Fed said in a statement that Cook and other board members serve 14-year tenures and cannot be removed easily from office, in order to ensure that monetary policy decisions are based on economic data and "the long-term interests of the American people." Though Trump on Monday said Cook's firing was "effective immediately," the Fed's statement indicates that it sees Cook's status as unchanged. The central bank next meets to set interest rates on September 16-17, and based on the Fed's statement it appears it would take a court ruling between now and then for her to be prevented from participating. The attempt to influence U.S. monetary policy has shaken confidence in the dollar and U.S. sovereign debt and sparked fears of global financial turmoil. Wall Street's main equities indexes closed slightly higher on Tuesday, while the dollar dropped. The yield curve on U.S. Treasuries steepened on Tuesday as Trump's attempt to fire Cook raised concerns about the U.S. central bank's independence and the prospect of a potentially more dovish composition of Fed policymakers. Trump said in a letter to Cook on Monday that he had "sufficient cause" to fire her because she had described separate properties in Michigan and Georgia as primary residences on mortgage applications before she joined the Fed in 2022. In recent months Trump has fired several Black women who held senior government positions, including the head of the Library of Congress and the chair of the National Labor Relations Board. MORTGAGE QUESTIONS William Pulte, a Trump appointee who is director of the Federal Housing Finance Agency, first raised questions about Cook's mortgages last week and referred the matter to U.S. Attorney General Pamela Bondi for investigation. Bondi has yet to say whether the Justice Department will take action. Cook took out the two mortgages in question when she was an academic. She is due to serve on the Fed board through 2038, but the Federal Reserve Act of 1913 allows removal of a sitting governor "for cause." Until now, that power has not been tested. U.S. presidents have largely taken a hands-off approach to Fed matters to ensure confidence in monetary policy. Peter Conti-Brown, a scholar of the Fed's history at the University of Pennsylvania's Wharton School, noted that the mortgage transactions preceded her appointment to the Fed and were in the public record when she was vetted and confirmed by the Senate. "The idea that you can then reach back, turn the clock backward and say, you know, 'All these things that have happened before now constitute fireable offenses from your official position' is to me incongruous with the entire concept of 'for cause' removal," Conti-Brown said. Academic research has found that policymakers who are allowed to manage inflation independent of political meddling generally achieve better outcomes. "The Fed as an institution escaped harm in the first Trump administration, and will not be so fortunate this time around," said Tim Duy, chief U.S. economist at SGH Macro Advisors. https://www.reuters.com/world/us/trump-says-he-is-removing-fed-governor-cook-2025-08-26/

2025-08-26 09:11

Market reaction muted after Trump says he fired Lisa Cook Analysts say Fed credibility further undermined Selling U.S. not easy when rate cuts loom SINGAPORE, Aug 26 (Reuters) - Global investors were shell-shocked on Tuesday after U.S. President Donald Trump struck another blow at the Federal Reserve's independence, caught between the concerns over politicisation of policy and the payoffs for markets. Trump's announcement he was firing Fed Governor Lisa Cook surprised markets, even though he had made clear last week that Cook was a target and has for months attacked Chair Jerome Powell as part of his campaign to get the Fed to cut rates. Sign up here. "It's another crack in the edifice of the United States and its investibility," said Kyle Rodda, a senior financial market analyst at Capital.com in Melbourne. Rodda said he was concerned about the motives of the Trump administration, that the move was not to preserve Fed integrity but rather to install Trump's own people at the central bank. "It goes back to trust in institutions," he said. While Cook's departure is not assured and she has disputed Trump's authority to remove her, that Trump said her firing was "effective immediately" just two weeks before the Fed's policy meeting, is another matter of concern for investors. Still, market reaction was tame. Short-term Treasury yields fell slightly, while expectations such forced easing of monetary conditions will lead to inflation pushed the yield on the 30-year bond up 3.9 bps to 4.928%. The S&P 500 stock index (.SPX) , opens new tab opened a slight 0.06% lower, while the dollar's index versus a basket of currencies was 0.27% easier. "People want to see if it happens, but at the same time, it's very difficult to sell the U.S. because of the credibility issues," said Tohru Sasaki, chief strategist at Tokyo-based Fukuoka Financial Group. One factor investors have to consider is Trump's trade deals, which require countries across Europe and Japan and South Korea to invest hundreds of billions in the United States, Sasaki said. "If there is a lot of investment into the United States, eventually the dollar will be supported, U.S. equities will be supported. So you may just lose money making a short position in the dollar or U.S. assets." EXCEPTIONALISM Trump's gradual ratcheting up of his campaign to exert more influence over the path of monetary policy has already knocked confidence in U.S. sovereign debt as a safe investment, and in the exceptional advantage the dollar enjoyed as a currency of choice. That advantage had allowed the U.S. to fund a massive national debt that currently stands at $36 trillion, and owe international investors some $26 trillion at the end of 2024. Foreign money has been leaving U.S. markets since Trump took over as president. Global ex-U.S. equity funds have received massive flows as investors redirected capital from the United States, LSEG Lipper data shows. Investors have sold U.S.-focused funds steadily since May. The dollar index has lost more than 9% of its value so far this year, and while U.S. stocks have been hitting record highs this month, they have lagged the double-digit gains in many other markets riding a technology and artificial intelligence boom. Foreign official and international accounts, such as central banks and reserve managers, have also been shedding U.S. Treasuries, Fed data shows. Their holdings have dropped this year, some $35.6 billion during the week ending August 20 alone. "Markets have not priced in the fact that Trump could go after other Fed officials. What is priced in right now is that we have a higher chance of a rate cut in September and further cuts this year," said Shoki Omori, chief desk strategist at Mizuho Securities. "The dollar and U.S. rates will perform (based on) how aggressively Trump speaks about the Fed going forward." https://www.reuters.com/business/trumps-latest-fed-jab-breeds-more-dismay-than-drama-2025-08-26/

2025-08-26 07:31

MUMBAI, Aug 26 (Reuters) - With punitive U.S. tariffs about to take effect on Wednesday, most Indian companies remain light on hedges, data from a clearing house shows, increasing their exposure to rupee fluctuations. Indian importers booked $21.8 billion of forward dollar/rupee contracts between August 1 and August 21, CCIL data shows. Sign up here. That tally, averaging $2.6 billion a day, is the lowest pace of this fiscal year which begins in April and compares with a $3.3 billion daily average, heightening the exposure of Indian importers to currency volatility. While seasonal factors typically weigh on August activity, the subdued hedging activity stands out considering that U.S. President Donald Trump flagged the prospect of steeper India tariffs in the first week of the month, two analysts said. The muted hedging reflected hopes the tariff dispute would be resolved or at least delayed. A Nomura survey last week showed nearly half of the respondents saw less than a 40% chance of new levies, though the bank warned risks were higher. With tariffs now set to take effect, that optimism looked misplaced, FX advisors said, leaving importers more exposed to a weaker, more volatile rupee. "We were advising importers to secure at least two months of hedges," Kunal Kurani, vice president at FX risk management f Mecklai Financial, said. "From a risk perspective, it made sense to lock in rates rather than wait, protecting margins against a potential rupee slide." EXPORTERS For exporters too, hedging activity was lower in August, driven by the uncertainty over U.S. orders and the broader outlook on the rupee. An official at a seafood company, who did not want to be named since he is not authorised to speak to the media, said the firm was currently limiting hedges to confirmed orders amid doubts over how U.S. buyers will respond if new tariffs take effect. Previously, it routinely hedged against anticipated demand, before the spectre of U.S. duties clouded the outlook. Meanwhile, diamond exporter Hari Krishna Exports was limiting hedges betting on the potential for tariffs to weaken the rupee and the view that the currency was unlikely to strengthen much anyway. "It made sense to stay slightly more exposed," said Abhijeet Bhushan, CFO at Hari Krishna Exports. The Indian rupee dropped to 87.80 per dollar on Tuesday, nearing the all-time low of 87.95 and marking its weakest level in three weeks. https://www.reuters.com/world/india/light-hedging-leaves-indian-importers-vulnerable-us-tariffs-fallout-2025-08-26/

2025-08-26 07:29

KUALA LUMPUR, Aug 26 (Reuters) - Malaysia's commodities ministry is seeking to exempt crude palm kernel oil and palm kernel olein oil from the country's sales and services tax (SST), it said on Tuesday. The government expanded the SST in July, subjecting the palm oil industry and the oleochemical sector to the tax. Crude palm kernel oil and palm kernel olein oil currently face a 5% levy. Sign up here. The application for tax exempt status for both raw materials has been submitted to the Finance Ministry, deputy Plantation and Commodities Minister Chan Foong Hin told Parliament. "This exemption is justified considering that both are raw materials in the production of oleochemical products and not final products subject to taxation by the government," he said. Chan added that proposals to give SST exemption or relief for certain services that are critical to the industry's operations have also been considered to reduce cost pressure on industry players. https://www.reuters.com/sustainability/climate-energy/malaysias-commodities-ministry-seeks-tax-exemption-palm-oil-raw-materials-2025-08-26/

2025-08-26 07:20

Oil slips after four previous sessions of gains Prices remain in tight range amid geopolitical volatility, Barclays says Traders track Ukraine issues, impact of US tariffs on India SINGAPORE, Aug 26 (Reuters) - Oil prices edged down on Tuesday after surging nearly 2% in the previous session, with traders keeping a close eye on developments surrounding the Ukraine war that could disrupt Russian fuel supplies. Brent crude fell 37 cents, or 0.5%, to $68.43 per barrel at 0658 GMT, while West Texas Intermediate (WTI) crude also lost 40 cents, or 0.6%, to $64.40 per barrel. Sign up here. Both contracts rose to their highest in more than two weeks on Monday, with WTI climbing above the 100-day moving average. "The risks for crude oil prices appear tilted toward further gains, particularly if the price sustains a move above the $64–$65 resistance level," IG analysts said in a note. Oil's rally on Monday was primarily driven by worries about supply disruptions as Ukraine struck Russian energy infrastructure, and as traders anticipated more U.S. sanctions on Russian oil. The attacks disrupted Moscow's oil processing and exports, created gasoline shortages in some parts of Russia, and came in response to Moscow's advances on the front lines and its pounding of Ukraine's gas and power facilities. Barclays, in a note to clients on Monday, said oil prices remain in a tight range amid geopolitical volatility and relatively resilient fundamentals. U.S. President Donald Trump has renewed his threat to impose sanctions on Russia if there is no progress towards a peace deal in the next two weeks. Traders will also be monitoring the impact of looming U.S. tariffs against India for its continued purchase of Russian oil, said Ole Hansen, head of commodity strategy at Saxo Bank. Indian exporters are bracing for disruptions after a U.S. Homeland Security notification confirmed Washington will impose an additional 25% tariff on all Indian-origin goods from Wednesday. This means Indian exports will face U.S. duties of up to 50% - among the highest imposed by Washington. Traders are awaiting the U.S. inventory data from the American Petroleum Institute later in the day, with expectations pointing to a fall in crude and gasoline stocks but a possible build-up in distillate inventories. https://www.reuters.com/world/middle-east/oil-eases-after-hitting-over-two-week-high-russia-supply-risks-2025-08-26/