The dollar weakened and US borrowing costs jumped after President Donald Trump claimed to have sacked Federal Reserve governor Lisa Cook, escalating his battle with the country’s independent central bank.
In a move without precedent in modern US history, Trump said on Tuesday evening that Cook was “effective immediately” removed from her position on the Fed’s seven-strong governing board over allegations of mortgage fraud. Cook has denied wrongdoing and said she would not resign, setting the stage for a legal battle over whether the president has the authority to fire a Fed governor.
The dispute comes as Trump intensifies pressure on the central bank to deliver steep interest rate cuts to support the economy and the jobs market.
Investors sold US government bonds following Trump’s remarks, sending yields on 30-year Treasuries up 0.06 percentage points to 4.92 per cent. The dollar slipped 0.15 per cent against a basket of major currencies and 0.13 per cent against sterling, falling to $1.35. Gold, a traditional safe haven, climbed 0.4 per cent to $3,388.60 an ounce, its highest since 11 August.
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