Select Language

Are the courts thwarting Trump's plans? - Commerzbank

Breaking news

Are the courts thwarting Trump's plans? - Commerzbank

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
update 2025.09.01 19:28
Are the courts thwarting Trump's plans? - Commerzbank

update 2025.09.01 19:28

When I read the news about the dismissal of Fed Governor Lisa Cook on a newsflash during my vacation, I was certain the markets would go crazy. To my surprise, however, I now have to acknowledge that EUR/USD is trading nearly unchanged compared to levels from three weeks ago. Even in the options market, I can't detect any heightened nervousness. Hedging against a USD crash relative to the euro has even become cheaper! And after reading some market commentaries, I can see I'm not the only one surprised by this level of calm, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

USD investors can indeed breathe a sigh of relief

"It should be indisputable what a catastrophic signal this unprecedented attack by a U.S. president on the independence of the Federal Reserve sends to USD exchange rates. Absolutely everyone must understand that the accusations against Cook are a clear warning signal to the other FOMC members to bow to government pressure. Some argue that Cook's dismissal does not change the short-term U.S. interest rate outlook. But that's not what's relevant for the dollar. What is decisive is the assumption that the Fed's reaction function will be significantly more dovish in the long term. In other words, the central bank is likely to respond less actively to inflation risks in the future than it has done so far. For those already uncomfortable with the attacks and outbursts against the Fed Chair and his colleagues now, just imagine what the situation would look like if inflation rises and the central bank signals the need for rate hikes."

"So why isn't the dollar trading significantly weaker? I strongly suspect the explanation lies in the unshakable belief in the "checks and balances" of U.S. democracy. The power of the state does not rest solely in the hands of the U.S. president. We saw a demonstration of this principle over the weekend: A U.S. appeals court declared parts of the tariffs introduced under President Trump to be illegal. The case may now move to the Supreme Court. This brings the removal of reciprocal tariffs one step closer. The same applies to the Cook case: The governor has already filed a lawsuit contesting her dismissal. And when you read the opinions of experts, it indeed seems questionable whether the grounds for her dismissal are legally valid. Here too, Trump faces the threat of a defeat."

"If it truly turns out that the separation of powers in the U.S. holds firm and the judiciary thwarts Trump's attack on the Fed, USD investors can indeed breathe a sigh of relief. However, the courts' final ruling is still pending. Furthermore, it must be assumed that Trump would also accept such a ruling if it goes against him. The latter, as should be clear, is by no means guaranteed."


Date

Created

 : 2025.09.01

Update

Last updated

 : 2025.09.01

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Fed's Goolsbee warns against series of rate cuts

Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee broke away from the overarching narrative of consecutive Fed rate cuts heading through the end of the year, widening the narrative gap between Fed incumbents and Donald Trump's newly-minted Fed plant Stephen Miran.
New
update2025.09.25 04:31

Gold retreats from record high as Powell cools cut bets, US Dollar strengthens

Gold (XAU/USD) price turns negatively on Wednesday after rallying for three consecutive trading days, which pushed the yellow metal to a record high at $3,791, before retreating somewhat as investors digest Federal Resever (Fed) Chair Jerome Powell's comments, which seem to pour cold water on rate c
New
update2025.09.25 04:11

Forex Today: SNB rate call, US GDP, Japan Tokyo CP inflation on deck

The US Dollar lurched higher on Wednesday, sparked by a fresh round of risk aversion across the broader markets. Central banks worldwide are grappling with two-speed economies of varying degrees, and many are battling a steepening slowdown in economic activity.
New
update2025.09.25 03:45

USD/JPY hits three-week high as Greenback rebounds, BoJ minutes in focus

The Japanese Yen (JPY) weakens sharply against the US Dollar (USD) on Wednesday, with USD/JPY advancing to its highest level since September 3.
New
update2025.09.25 03:34

Dow Jones Industrial Average falls for a second day as tech rally hesitates

The Dow Jones Industrial Average (DJIA) followed the broader market lower on Wednesday, shedding 270 points at its lowest. Investors are taking profits and trimming their exposure to the AI-fueled tech rally ahead of the latest US employment figures and inflation data.
New
update2025.09.25 02:51

BoE's Greene: The supply side needs more attention

During a speech at the Adam Smith Business School of the University of Glasgow, Bank of England (BoE) Monetary Policy Committee (MPC) member Megan Greenebroke away from "tradiitional" policy planning rhetoric, warning that global central banks need to pivot into a different perspective on managing s
New
update2025.09.25 02:04

WTI climbs to three-week high as EIA draw and geopolitical risks lift Oil prices

West Texas Intermediate (WTI) Crude Oil extends its rebound for the second straight day on Wednesday, recovering from its weakest level in nearly two weeks, hit earlier on Monday.
New
update2025.09.25 01:02

AUD/USD slips to 0.6590 as Powell highlights dual mandate challenges

The Australian Dollar drops versus the US Dollar on Wednesday amid the lack of catalyst, following remarks by the Fed Chair Jerome Powell, who said that the Fed would continue to balance the dual mandate of the central bank. The AUD/USD trades at 0.6590, down 0.11%.
New
update2025.09.25 00:20

Mexico FX Today: Peso steady as Banxico prepares new rate cut

The Mexican Peso (MXN) edges slightly lower against the US Dollar (USD) on Wednesday, with the USD/MXN pair trading at 18.41 at the time of writing, up 0.3% on the day.
New
update2025.09.24 23:52

GBP/JPY trades sideways as BoE Bailey sees scope for lower rates

The British Pound (GBP) trades sideways against the Japanese Yen (JPY) on Wednesday, with GBP/JPY modestly higher, rebounding after briefly slipping to its lowest level since September 9 on Tuesday.
New
update2025.09.24 23:48

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel