Market volatility: Dollar dips, gold climbs as Trump ousts Lisa Cook

Donald Trump’s battle with the US central bank took a drastic turn as the US President decided to remove Federal Reserve Governor Lisa Cook from her position on allegations of mortgage fraud.

This unprecedented administrative move has sent shockwaves across the world, causing volatility in the Asian markets.

After the major announcement, the dollar and US Treasuries dipped on Tuesday and US currency fell against the euro.

The euro gained 0.1 percent against the dollar, reaching $1.1631. The yen remained unchanged at 147.82 per dollar after rising over 0.5 percent.

Moreover, stock markets in Asia retreated on Wall Street driven by the uncertain prospects for a rate cut and Fed policy.

On the other hand, gold prices rose a two-week high as it strengthened 0.21% to $3,373.12. U.S. crude dipped 0.5% to $64.48 a barrel.

According to KCM Trade chief market analyst Tim Waterer, “Trump has put traders a little bit on edge once again with his comments about Cook, which has resulted in gold picking up additional safe-haven flows today.”

The US dollar index slumped 0.2 percent against its rival, making gold accessible and less expensive to overseas buyers.

The Kospi index dipped 0.85 percent. In Japan, the Nikkei 225 fell 0.85 percent.

Australia’s S&P/ASX 200 benchmark declined by 0.52 percent. Hong Kong’s Hang Seng index fell 0.22 percent. China’s CSI 300 appreciated by 0.14 percent.

Bart Wakabayashi, the Tokyo Branch Manager of State Street, said, "All of this, tariffs included, is just another reason the U.S. can't be trusted. There's no credibility. That's the basis of the U.S. being the safest investment in the world. If you're a responsible investor, it gives you pause."

While discussing the implications , OCBC currency strategist Christopher Wong commented, "The move is another example of concerns over Fed independence weighing on the dollar and has implications for the potential makeup of the FOMC going forward. That adds to rate cut prospects and a softer dollar outlook."