– Trump moving in on Fed-Fires Governor Cook
– Trump threatens tariffs on EU and countries with a Digital Tax.
– US dollar opens higher on mild risk aversion.
USDCAD open 1.3848, overnight range 1.3842-1.3868, close 1.3861, WTI 63.73, Gold 3373.22
The Canadian dollar drifted lower on the back of deteriorating global risk sentiment after Trump continued to erode the independence of the US Federal Reserve. Traders are cautious in the face of fresh US sanctions to be levied on India, and upcoming Japanese and Chinese trade talks in the US.
WTI oil traded in a 63.65-64.77 range and is at its session low in NY. New tariff threats and a firmer US dollar are weighing on prices.
Trump dismissed Fed Governor Lisa Cook for “sufficient cause” due to unproven allegations of mortgage fraud. The legality is questionable since she hasn’t been charged or convicted.
The White House is also weighing sanctions on EU officials tied to the Digital Tax. Such penalties would run afoul of numerous international rules and treaties which may explain why Trump opted for tariffs. Last night he tweeted that any country with digital taxes faces new tariffs on exports to the U.S. and curbs on access to American technology.
Asian equity markets slid after Trump’s anti-Fed actions rattled sentiment. Japan’s Topix lost 1.08%, Australia’s ASX 200 slipped 0.41%, and Hong Kong’s Hang Seng dropped 1.18%.
By 7:10 am EDT, Europe was softer, with the French CAC-40 down 1.47% and the German DAX off 0.32%, and the UK FTSE 100 down 0.51%. S&P 500 futures fare flat while the U.S. 10-year yield is 4.297%.
EURUSD traded in a 1.1602-1.1660 range, pressured by political turmoil in France as Prime Minister Francois Bayrou’s minority government faces a likely no-confidence defeat on September 8. Trump’s tariff threats added another headwind, keeping intraday bias bearish below 1.1680 with scope toward 1.1580.
GBPUSD climbed in a 1.3434-1.3491 band. August’s BRC Shop Price Index rose 0.9% from 0.7% in July, but the results were ignored. Support came from EURGBP selling as traders shifted away from euro exposure on French risks, but volumes are light in the final summer week.
USDJPY bounced between 146.99 and 147.91. Risk aversion from Trump’s assault on Fed independence initially spurred yen demand, though those flows faded amid ongoing Japan-U.S. trade talks.
AUDUSD held in a 0.6470-0.6494 range, barely moved from the previous session. Traders ignored the RBA minutes from August 12 as they offered nothing new.
Today’s US Durable Goods Orders, S&P Case-Shiller Housing Price Index and Consumer Confidence are on tap.
