USD/JPY rose toward 147.90 in the Asian session but the rebound faces doubts about its sustainability amid U.S. dollar turmoil following President Donald Trump's surprise dismissal of Lisa Cook from the Federal Reserve. The removal poses a direct threat to the Fed's credibility and independence and could erode investor confidence in U.S. monetary policy. The dismissal signals an effort by the White House to influence Fed appointments, potentially enabling nominees aligned with the president. International investors may reassess the dollar, while the Japanese yen could gain as a safe haven amid improved domestic political stability.
However, this rebound, while technically important, remains clouded by doubts and questions regarding its sustainability, given the state of turmoil surrounding the U.S. dollar after President Donald Trump's surprise decision to dismiss Lisa Cook from the Federal Reserve. This unprecedented move in the more-than-century-old history of the Federal Reserve reflects, in my view, a direct threat to the credibility and independence of the U.S. central bank, undermining one of the most critical pillars of investor confidence in American monetary policy.
The dismissal of Cook is not merely an administrative event but a political message carrying with it a clear attempt by the White House to exert control over the Federal Reserve's decisions. With Cook gone, Trump has an open path to strengthen his influence within the board through nominees such as Steven Mnuchin or even David Malpass. These names are not far from the president's political and ideological rhetoric, opening the door to transforming the central bank from an independent institution into a tool within domestic political struggles.
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