FX Weekly Overview (Brazil Issue)
Dollar to reflect US economic data, Central Bank minutes, inflation in Brazil, and the Middle East
Leonel Mattos
- Currencies
Dollar and Bonds Hit as Trump Sparks Fed Uncertainty
Dollar and Bonds Hit as Trump Sparks Fed Uncertainty
David Scutt, FOREX.com APAC Market Analyst, explores the unprecedented removal of Federal Reserve Governor Lisa Cook and its consequences for global markets.
Key Takeaways
- Trump’s removal of Lisa Cook raises concerns over Federal Reserve independence
- Markets now weigh deeper interest rate cuts and a more dovish policy tilt
- Bond curve steepening signals unease over inflation and policy credibility
Fed Independence Under Pressure
The sudden removal of Federal Reserve Governor Lisa Cook by President Trump has raised questions about the central bank’s autonomy. Cook has already stated that the president does not have the authority to remove her, pointing to a likely legal challenge. This uncertainty adds to market concerns about political interference in monetary policy.
Interest Rate Expectations
Market pricing had already factored in fewer than 100 basis points of rate cuts through the middle of next year. With Cook’s departure and the potential for a wave of dovish appointments, investors are now bracing for the possibility of deeper easing being priced into the curve. This development is particularly relevant for the U.S. dollar, given its close alignment with rate expectations.
Dollar and FX Market Correlations
Daily rolling correlations over the past year show that U.S. two-year yields have moved closely with major FX pairs, including the euro, yen, pound and Swiss franc. Correlation scores of 0.74 or higher highlight the risk that further declines in rate expectations could push these currencies higher against the dollar.
Bond Market Signals
Long-term inflation expectations are already running above target, with ten-year breakevens more than 40 basis points above the Fed’s 2 percent mandate. At the same time, the steepening of the U.S. 2s30s curve to levels not seen since early 2022 signals investor unease about a potential policy mistake. The bond market is increasingly pricing the risk that credibility could be eroded, locking in higher inflation over time.
Follow the Global Macro Calendar
What are the major events and indicators on tap for the global economy that could charge volatility in markets and reshape deeper fundamental themes? Sign up for the updated Global Macro Calendar updated each week with a two week look ahead of the top events!
Sign Up See our financial videos hub
---- Written by Frederic Guetin, StoneX TV Producer>
---- Expert: David Scutt, FOREX.com APAC Market Analyst
- Currencies
The subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
© 2026 StoneX Group Inc. all rights reserved.
Discover more insights
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
Related articles for Currencies
Record Highs Contend With Volume Restraints, US Inflation Top Event Risk Ahead
US indices have led sentiment to fresh highs this past week even as the fundamental backdrop struggles to present a solid foothold. Will thin liquidity aid or hamper the swell and what does the event risk ahead propose?
John Kicklighter
- Currencies
A Softer U.S. Inflation Print and the Fed's Increasingly Fine Balance
A softer run of U.S. data is doing more to move the U.S. dollar than any chart, with a jobs report and an inflation print set to land back to back. A cooler U.S. CPI report would hand the Federal Reserve room to ease, and that prospect is already loosening the dollar's grip.
Editorial Team
- Currencies
StoneX: We open markets
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bilateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and track record are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform to “boots-on-the-ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.