The dollar index (DXY00) on Wednesday fell by -0.05%. The dollar fell from a 1-week high on Wednesday and turned slightly lower on a decline in T-note yields. Also, political risks and concerns about Fed independence weighed on the dollar after President Trump called for Fed Governor Lisa Cook to resign amid a probe into two personal mortgages. FHFA Director Pulte wrote a letter to Attorney General Bondi suggesting Ms. Cook may have committed a criminal offense by allegedly falsifying bank documents and property records to acquire more favorable loan terms.
The dollar initially moved higher on Wednesday after EUR/USD fell to a 1-week low when ECB President Lagarde said she sees slower growth in the Eurozone. The weakness in stocks on Wednesday has also boosted some liquidity demand for the dollar. In addition, the dollar has support due to speculation that last week’s stronger-than-expected July PPI report could keep the Fed from cutting interest rates at next month’s FOMC meeting, as expectations for a -25 bp Fed rate cut in September fell to 84% area from 93% before the report.
