- USD/JPY may face difficulties as the US dollar could encounter issues amid rising concerns about the Federal Reserve’s independence.
- President Trump has announced the termination of federal governor Lisa Cook’s position.
- Akazawa, Japan’s chief trade negotiator, is set to return to the US for discussions on Thursday.
During Asian trading on Wednesday, USD/JPY bounced back from earlier losses, hovering around 147.60. However, the US dollar might struggle as worries about the Federal Reserve’s independence grow.
On Tuesday, President Trump declared that he had dismissed Lisa Cook from her role on the Fed’s board. This marks a notable precedent, as it’s the first time in over a century that a president has removed a central bank governor.
Sources like Reuters suggest that with Cook’s seat now vacant, Trump will have an opportunity to shape the Fed’s board, which consists of seven members, in his favor. He’s already put forward economist Stephen Milan for a temporary position that will end in January, with speculation that Milan may also aim for Cook’s role. Additionally, reports indicate that former World Bank president David Malpass is a potential contender.
The Japanese Yen might strengthen due to rising public approval and stabilizing domestic politics. A recent Yomiuri Shimbun poll indicated that Prime Minister Isba’s approval rating increased by 20%, even though his coalition lost its majority in the July elections.
Asahi TV has reported that Akasawa is returning to the US on Thursday to focus on Japanese investments there. Traders are keeping a close eye on upcoming economic data releases later this week, particularly Japan’s Tokyo Consumer Price Index (CPI) and retail figures expected on Friday.
