The dollar has weakened a bit further, in line with the direction set by lower front-end US Dollar (USD) rates, ING's FX analyst Francesco Pesole notes.

DXY can keep hovering around 98.0 for now

"Meanwhile, Fed Governor Lisa Cook has sued President Trump, claiming that an unsubstantiated allegation related to a private mortgage application is not sufficient 'cause' to fire her. There is still plenty of uncertainty about the timing of any court ruling and whether Cook will remain in office. The two-year USD swap rate has been repriced only 5bp lower since Cook was fired, and pressure on long-end Treasuries has eased – signalling a rather sanguine approach."

"While markets remain reluctant to speculate on this Fed story and continue to focus on data-driven short-term developments, the downside risks for the dollar have undoubtedly grown. If Cook leaves, her replacement could tip the balance, giving dovish governors a 4-to-3 majority - especially when factoring in Christopher Waller, Michelle Bowman, and the expected replacement for Stephen Miran (who could also become Fed Chair), assuming Jerome Powell stays on the board beyond May. Since governors must approve the appointment of regional Fed Presidents, who make up the remaining five FOMC votes, the risks of a long-lasting dovish shift would be considerably higher."

"For today, expect great focus on US core PCE figures for July - remember that is the Fed’s favourite measure of inflation. We expect a 0.3% month-on-month print, in line with consensus. A slightly higher print could prompt a modest positive dollar reaction, but the bar for a rethink of the strong call for a September cut is high following Powell’s dovish remarks at Jackson Hole. We think DXY can keep hovering around its 50-day moving average of 98.0 for now, although risks remain tilted to the downside."