London / New York (Reuters – The dollar fell sharply on Wednesday after Bloomberg, invoking an unidentified White House official, said US President Donald Trump has soon dismissed the president of the Federal Reserve Jerome Powell.
The dollar dropped 0.7% compared to a basket of large currencies in a few moments after the news, while market market areas such as US regional banking actions have dropped and gold has rallied.
The longer -term treasure bills were sold, leaving the 30 -year obligation giving 5.06%, up nearly 5 base points of the day. He had exchanged earlier to a hollow of around 4.97%, down 5 BPS on Tuesday.
Investors have been in advance for weeks on the prospect of withdrawing from Powell from his work before the end of his mandate next May, because Trump criticized him several times for not having reduced the prices of us.
Comments:
Francesco Pesole, FX Strategy, ING, London:
“If we get a title today on Powell (referral), then we are considering a much larger sale in the dollar. The independence of the federal reserve is the foundation of American status as reserve currency n ° 1.”
“Given the implications of the elimination of a Fed chair, the reaction is still relatively contained. Euro / dollar is $ 1.17 and should be negotiated on this subject, because the implications are massive. The markets are still not fully assessed all of this.”
Chris Beauchamp, Chief Market Analyst, IG, London:
“The news has put the dollar firmly on the back, but also led to lower actions. The departure of the president of the Fed would leave the independence of the central bank in question. It seems likely that its recent successes (of Trump) by adopting its bill of tax and expenditure, and the cease-fire in the Middle East, embarked on the president to act.”
“Now we will see if vigilants in the bond market will put the United States in sight. Such a dramatic decision also suggests that there is no retro-bisisses of the prices this time, in particular with actions with record heights.”
Lee Hardman, senior analyst in currencies, MUFG, LONDON:
“If this happens (Trump draws Powell), it would be very damaging for the confidence of investors in the dollar, which is why we are starting to see the heavy sale, and that could extend more if he did.
“It is not clear if Trump has the power to dismiss Powell, so we would be able to see a legal challenge very quickly, but even if it was canceled, the confidence would be sustainable, and that strengthens our downward perspective on the dollar.”
(Report by Emea and Us Breaking News Teams; compiled by Amanda Cooper; edition by Elisa Martinuzzi and Dhara Ranasinghe)
