Trump’s Shock Fed Move Shakes Global Markets: Dollar Sinks, Gold Jumps

A Stunning Political Twist

Financial markets were thrown into disarray Tuesday after President Donald Trump announced the dismissal of Federal Reserve Governor Lisa Cook. The abrupt move, officially tied to what the administration called “mortgage improprieties,” stunned economists and traders alike, raising fears over the political independence of the U.S. central bank.

The timing could hardly have been more sensitive, with the Fed already facing intense scrutiny over its upcoming interest rate decisions.

Currency Pressure Builds

The immediate fallout hit the U.S. dollar, which fell against a basket of major currencies. Investors quickly priced in a weaker policy outlook, interpreting the decision as a potential blow to the Fed’s credibility.

• Short-term Treasury yields slid as markets doubled down on expectations for near-term rate cuts.
• Long-term yields rose, reflecting heightened uncertainty and a risk premium being baked into U.S. assets.

This unusual yield divergence highlighted just how unsettled investors feel about Washington’s encroachment on monetary policy.

Gold Takes the Spotlight

As confidence in the dollar faltered, investors turned to tried-and-true safe havens. Gold prices surged, pushing toward a two-week high, while silver and other defensive assets saw renewed buying.

“Every time central bank independence is questioned, gold gets a bid,” one commodities strategist noted. “This time is no different — except the stakes are higher because it’s coming from the very top of government.”

Bigger Than One Decision

The firing of a sitting Fed governor is almost without precedent in recent decades. More than a personnel shakeup, it raises pressing questions:

• Can the Fed maintain policy credibility if leadership changes are politically motivated?
• How will global investors react if confidence in the world’s most influential central bank erodes?
• Could this accelerate safe-haven flows into gold and non-dollar assets?

For now, the answers remain unclear. But one thing is certain: Trump’s decision has injected a fresh wave of uncertainty into already fragile markets.

The Road Ahead

Investors are now bracing for a volatile week. Beyond the fallout from Cook’s dismissal, the Fed is facing critical upcoming data on inflation and employment. Each release will test whether markets remain anchored to fundamentals or continue to trade on politics.

The broader message is unmistakable: the credibility of U.S. monetary policy, once seen as untouchable, is now firmly in the spotlight.