Trump's Shake-Up at the Fed Sends Shockwaves Through Markets

President Trump's announcement of removing Federal Reserve governor Lisa Cook reshaped market confidence and influenced the dollar's performance. Asian and U.S. stock markets reflected increased uncertainty for a Fed rate cut in September. Trump's actions highlight ongoing challenges to the Fed's independence and global investment credibility.

In a significant move impacting global markets, President Donald Trump announced the removal of Federal Reserve governor Lisa Cook, leading to a slide in both the dollar and U.S. Treasuries in Asian trading on Tuesday. Trump's decision has sparked concerns about the Federal Reserve's independence and its implications for U.S. assets.

This development follows declines across Asian shares and U.S. stock futures, as prospects for a Federal Reserve rate cut next month grow increasingly uncertain. Analysts point to the situation as undermining the credibility of U.S. investments, traditionally considered among the safest in the world.

Market reactions were immediate: the dollar dropped 0.4% against the yen, while the euro saw a 0.3% increase against the dollar. The yield on 10-year Treasury notes showed a slight rise. With Trump's bold reshaping of the Fed board by removing Cook, appointed until 2038, traders and investors remain watchful as upcoming data for August could still influence future Fed policy decisions.

(With inputs from agencies.)