Fed: Trading scandal complicates Powell's renomination, downside risks for USD – MUFG

FXStreet Insights Team FXStreet

The US dollar has continued to weaken amidst fresh uncertainty over Fed policy. Disclosure documents reveal that the spectacle of Fed officials personally trading stocks extended to the chair himself. As Powell reappointment is a close call, this story could end tip the balance, potentially damaging the greenback, economists at MUFG Bank report.

Fed Chair Powell faces reappointment amid tumult

“The probability of Chair Powell being given a second term dropped yesterday on PredictIt.org to 65% from around 80% 24 hours earlier. At one point the probability dropped to an intra-day low just below 60%. It was triggered by an online report on Fed Chair Powell’s personal stock account dealings.”

“Chair Powell remains the clear favourite to remain Fed Chair after his term ends in February of next year, which is our base case scenario supporting our outlook for stronger US dollar heading into next year. However, the decision does not appear as much as a done deal as before which has increased uncertainty and downside risks for the US dollar.”

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