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President Trump’s attempt to sack Fed Governor Cook is part of a broader pattern, not only for his administration but an increasingly partisan US. Other high-income countries are not going the same way.

• US President Trump’s attempts to sack Fed Governor Lisa Cook are part of a pattern of norm-breaking behaviour for the administration. While extreme compared with the past, they are also a culmination of decades-long political trends in the US.
• It is unlikely that other countries will follow the US example. More likely is that they will tack in the other direction to distinguish themselves from the Trump administration.
• As with disruptive personalities in volunteer organisations, the norm-breaking behaviour of the Trump administration is working because others are acquiescing to it. A principled rebuttal from Cook, and CDC head Monarez, could even be the beginnings of a cascade of resistance, if it succeeds.

Back in April, many investors were still reeling about the Trump administration’s rapid-fire policy announcements and break from earlier norms. It was not just the tariffs: the DOGE goings-on, attacks on universities and rising deportation rates were among the other concerns I heard on my client trip that month. All of these issues contributed to a general feeling that the US was no longer a nation of laws. One investor even commented to me that ‘America is cooked’.

Events of recent weeks have continued in this vein. Trump’s attempt to fire Federal Reserve Governor Lisa Cook is part of a pattern of summary firings designed to give the executive more control over institutions and policy, including the heads of the Bureau of Labor Statistics (BLS) and Center for Disease Control (CDC). Financial market participants have been especially focused on the Cook firing, given the importance of the Fed in the global financial system and the weight traditionally placed on central bank independence. Where the enabling legislation stated that officials served at the pleasure of the President, exits have been confirmed. The Federal Reserve is in a different position legislatively, meaning that Governor Cook has so far resisted dismissal by Truth Social post. (Like Cook, CDC head Susan Monarez has refused to resign.)

The Trump administration’s actions, while much more extreme than the past, represent the culmination of a longer-term pattern in US politics. For the past 30 or so years, we have seen increased partisanship and refusal in some quarters to fully accept the results of Presidential elections – from the constant investigation of Bill Clinton, to ‘hanging chads’, to ‘born in Kenya’, to ‘Russian disinformation’, to ‘stop the steal’. We have also seen – as previously noted – a decades-long decline in state capacity in the US. Its political system now struggles to take collective action and make difficult choices in the pursuit of the common good. And the Trump administration has not been the first group to attempt to ruin people’s careers based on mere accusations without due process – that is what some of the more egregious so-called ‘cancellations’ were about.

The acquiescence of other US institutions to the Trump administration’s norm-breaking is also an essential part of the current situation. Recall that Congress could take away Trump’s powers to enact tariffs, if it wanted to. This acquiescence, too, has its antecedents in broader social trends. Plenty of volunteer organisations can attest that when one norm-breaking disruptive personality joins, the organisation is so discombobulated by that person’s outrageous behaviour that it fails to set the necessary boundaries against the behaviour. Standing up to the norm-breaker and asserting the need for due process and rule of law is hard. Not all organisations have managed to find the necessary resolve when faced with a disruptive individual or a staff revolt, petition campaign or online pile-on against a person facing allegations without due process.

Markets seem, again, to be shrugging off the latest headline outrages. In any case, it pays not to take social media posts at face value, and to remember that Trump Ambit Claims Often. Surface appearances might be just that, though. Although the spread between very long US bond yields (30-year) and the usual 10-year benchmarks remains within the range of recent history, it has widened noticeably, especially in recent days. Growing concerns about US fiscal sustainability are finding expression in this way.

We see little prospect that these moves will spill over to other countries to be replicated at their central banks. If anything, other countries will increase the emphasis on the importance of central bank independence, to distinguish themselves from what is going on in the US.

For similar reasons, we see little prospect of other major advanced economies going down the route of the Trump administration. We are in fact seeing increased determination to stand as a democratic bloc apart from the US. The ‘Coalition of the Willing’ European leaders supporting Ukrainian President Zelenskyy at last week’s Washington meeting is a case in point, as is Canada’s increasing engagement with Nordic nations.

The longer-term question is whether these norm-breaking acts by the Trump Administration will do lasting damage to the US’s economic performance and place in the world. This is a question of whether the checks and balances built into US institutions will ensure that they heal themselves in future years. Some of the pivots by the US’s western and Asian allies to be more self-reliant on defence will be hard to reverse. (And it’s giving President Trump what he wants.) If the experience of Brazil and the Philippines is any guide, though, norm-breaking governments do get voted out, and their legacies tend to fade as successor governments take a more moderate approach.

We also cannot rule out that resistance by Fed Governor Cook and CDC head Monarez could be the beginnings of a preference falsification cascade. First theorised by the economist Timur Kuran, the idea is that people might believe one thing, but do not express it publicly because it does not feel safe to do so. So they think everyone else believes the socially acceptable views publicly expressed even though that is not actually true. Once a few people start stating their true beliefs and ‘survive’, others join in and reveal their own true beliefs. The previous presumed consensus can crumble quickly under these circumstances.

The independence of Fed policymaking is key to the good functioning of global financial markets. But it may be that there is more at stake in a successful resistance of Trump’s attempts to fire Cook and Monarez than the position of the central bank.

Key insights from the week that was.

The main event for Australia this week was the Monthly CPI Indicator, and it certainly was a striking result. The headline CPI indicator bounced 0.9% in July, driving annual inflation from 2.1%yr to 2.8%yr, near the top of the RBA’s target range. That the trimmed mean measure also shot up to 2.7%yr points to a broad-based pick-up in underlying momentum and consequently upside risk to our Q3 CPI forecast.

One month’s data does not make a trend, especially as electricity prices drove the result. Underlying July’s 13% surge in electricity prices was a combination of state rebate roll-offs, the varied timing of the Commonwealth rebate extension and standard annual price increases. While each dynamic is well understood, their timing is uncertain, hence the relatively subdued reactions to the July report from market participants who continue to expect a 25bp rate cut in November.

In the lead-up to Q2 GDP next week, we also received two partial indicators of investment.

Construction activity was firmer than expected, bouncing 3.0% in Q2 to be up 4.8% over the year. This was mostly driven by a surge in lumpy mining infrastructure installations, accentuated by the release’s accounting treatment that sees projects recorded on completion versus the National Accounts’ accrual method (which incorporates activity completed each quarter). Conditions outside of the mining sector remain delicately poised: public work is retreating from peak levels almost as quickly as it attained them; however, a healthy pipeline of electricity generation and distribution projects should provide offsetting support into the medium-term.

Private CAPEX subsequently disappointed in Q2, a 0.2% gain a long way below the 0.8% consensus expectation. Growth over the past year of 1.7%yr is the result of the building out of essential infrastructure in the non-mining economy – predominately electricity, energy and data assets – while mining investment is 1.0% lower than a year ago. The outlook remains uninspiring, the latest estimate for 2025-26 CAPEX plans pointing to growth in real investment of just 1.2%yr, a touch above FY25’s 0.9%yr gain. To combat low productivity and capacity constraints, strong investment is necessary.

Our full Q2 GDP preview will be released today on Westpac IQ, and the ABS’ Q2 National Accounts release is due next Wednesday.

Offshore markets spent much of the week digesting insights from last weekend’s Jackson Hole Economic Symposium, especially FOMC Chair Powell’s remarks on the near-term outlook for policy.

Powell’s remarks were balanced and constructive overall, highlighting the full spectrum of risks the US economy faces and that the Committee is well placed to adjust policy gradually to match incoming data. That said, Chair Powell's remarks could be interpreted as putting a greater emphasis on the “rising” downside risks for employment which, to date, have been masked by reduced migration and participation.

Referencing the recently completed five-year review of the Federal Reserve’s Monetary Policy Framework, Chair Powell went on to discuss why a tight labour market does not, by itself, signal accelerating inflation and instead needs to be considered in the broader context of the economy and policy. Of course, other potential drivers of inflation also must be taken into consideration. While downside risks to current full employment warrant two cuts from the FOMC by year end, as we and the market forecast, in our view persistent inflationary pressure stemming from capacity constraints are likely to preclude additional easing to a neutral or expansionary setting in 2026, unless labour market slack grows materially.

Turning then to the academic discourse of the Symposium, the evolving state of global labour markets in response to demographic and structural change was the focus. Bank of Japan Governor Kazuo Ueda highlighted the impact of Japan’s ageing population, which has tightened the labour market and spurred increased participation from women as well as older men. Tight conditions have also led to greater job mobility among younger workers and consolidation among smaller firms who are struggling to keep up with wage growth. Ueda also noted that investment in labour-saving technology, particularly in services, is expected to enhance productivity going forward.

Similar dynamics were echoed by ECB President Christine Lagarde who observed that, despite fiscal constraint and the legacy of tight monetary policy, labour markets in the Euro Area have continued to tighten. This strength has been partly driven by delayed wage growth which has contained unit labour costs, thereby making labour a more attractive input. Firms have also increased headcount in response to declining average hours worked, with additional labour demand largely being met by rising participation amongst women, older workers, and foreign labour.

A subsequent paper from Nobel laureate Claudia Goldin investigated the drivers of declining fertility rates – a factor with profound implications for labour supply and policy over coming decades in both the developed world and some large developing markets, most notably China.

Key Highlights

• USD/JPY failed to start a fresh increase above 148.00.
• A key bearish trend line is forming with resistance at 147.80 on the 4-hour chart.
• EUR/USD could make another attempt to clear the 1.1720 resistance.
• GBP/USD is gaining pace and might rally if it settles above 1.3550.

USD/JPY Technical Analysis

The US Dollar attempted a fresh increase above 147.50 against the Japanese Yen. USD/JPY failed to settle above 148.00 and trimmed most gains.

Looking at the 4-hour chart, the pair traded below the 50% Fib retracement level of the upward move from the 146.57 swing low to the 148.18 high. The pair even settled below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

The current price action is bearish below the 61.8% Fib retracement level. On the downside, immediate support is 146.60. The next key support sits at 146.20. Any more losses could send the pair toward the 145.50 support zone.

On the upside, the pair now faces resistance near 147.60. The next key resistance sits at 147.80. There is also a key bearish trend line forming with resistance at 147.80 on the same chart. A close above 147.80 and 148.00 could set the pace for another increase.

In the stated case, the pair could rise toward 148.80, above which the bulls could aim for a move toward 149.20. Any more upsides could send USD/JPY toward 150.00.

Looking at EUR/USD, the pair started a fresh increase, but the bears might again attempt to prevent gains above 1.1720.

Upcoming Key Economic Events:

• US Personal Income for July 2025 (MoM) - Forecast +0.4%, versus +0.3% previous.
• US Core Personal Consumption Expenditure for July 2025 (MoM) - Forecast +0.3%, versus +0.3% previous.
• US Wholesale Inventories for July 2025 (preliminary) – Forecast +0.2%, versus +0.1% previous.

The short-term Elliott Wave outlook from the August 1, 2025 low projects an ongoing five-wave impulse structure. From that low, wave 1 peaked at 1.173, followed by a wave 2 pullback that concluded at 1.157. The internal structure of wave 2 developed as an Expanded Flat Elliott Wave pattern. After wave 1, wave (w) dropped to 1.1628, and a subsequent wave (x) rally reached 1.1716. Wave (y) then declined to 1.1579, completing wave ((a)) in a higher degree.

The rally in wave ((b)) topped at 1.174 before the pair turned downward in wave ((c)), unfolding as a five-wave impulse. From wave ((b)), wave (i) fell to 1.1682, and wave (ii) rose to 1.1709. Wave (iii) declined to 1.16, followed by a wave (iv) rally to 1.1665. Wave (v) then completed at 1.157, finalizing wave ((c)) of wave 2. The pair has now turned upward in wave 3 but requires a break above wave 1 at 1.173 to eliminate the possibility of a double correction. From wave 2, wave ((i)) reached 1.1697. A wave ((ii)) pullback should find support in a 3, 7, or 11 swing, supporting further upside as long as the pivot at 1.157 holds. This analysis suggests cautious optimism for continued upward momentum.

EURUSD – 60 Minute Elliott Wave Technical Chart:

EURUSD – Elliott Wave Technical Video:

https://www.youtube.com/watch?v=2_BNIdlJFz8

Oil is starting to push higher in a strong move as we speak.

After a seven-day consolidation between $63 and $64, prospects for better war outlooks and lower supply helped Oil prices rise from their lows.

A few days of rise tested the lower bound of the previous month's range ($65 to $70.5) as Markets sought more information on the Ukraine-Russia conflict.

Despite the previous weeks of geopolitical meetings between the US, Ukrainian, Russian, and EU Presidents, talks have been in limbo, and the lack of progress, combined with repeated assaults by Russia on Kiev, is not helping the situation.

The German Chancellor Merz just announced that there would be no Zelenskyy-Putin talks, not a big surprise when looking at the lack of headlines going towards that direction.

That comes despite US's Kellogg trying to make things sound better than they really are.

Discover technical levels for WTI trading as price are shooting higher.

US Oil Daily Chart

US Oil Daily Chart, August 28, 2025 – Source: TradingView

The most recent lows in the commodity allowed the formation of an intermediate downward channel, with prices starting to shoot since the last technical rebound.

Some accumulation had led to a breakout which stopped at $65.77 highs on Monday, but the fundamentals not progressing have led to the ongoing rally.

Sanctions on India have been re-iterated by US President Trump and it seems that economically pressuring Russia into a ceasefire will be one of the only ways to reach some type of truce.

The President was saying nice words too early, with the mess-around talks of Putin coming to watch football at the World Cup.

As I am writing this, Bulls are pushing within the $65 Zone.

US Oil 4H Chart

US Oil 4H Chart, August 28, 2025 – Source: TradingView

Bullish momentum is building in the ongoing bullish candle – the latest headlines seem to attract buyers.

Look at a break above the 200-period 4H MA, a break above should attract even more buying.

Level to place on your WTI Charts:

Resistance Levels

• $65 Pivot Zone (getting tested right now)
• Monday highs and 200 4H-MA 65.70
• $66 to $67 Mid-range level
• high range resistance $67.30 to $68 – Confluence with 50 and 200 Day MAs

Support Levels

• $62.00 to $62.50 consolidation support
• Wednesday lows $62.19 (current double bottom)
• $60.5 Low of May Range
• $55 to $57 2025 lows Main support

US Oil 1H Chart

US Oil 1H Chart, August 28, 2025 – Source: TradingView

The current move is strong, watch for potential continuation if the move keeps on going.

It seems that some decent short-selling has been accumulated in the past weeks, and a short-squeeze could come into play – keep an eye on the 4H 200-period MA mentioned above.

Safe Trades!

Starting with a UK national holiday, coupled with a noticeably sparse UK economic calendar, the current trading week has been somewhat uneventful for cable traders.

Having only recently secured its best six-monthly performance since 2020, riding a wave of dollar downside, GBP/USD currently floats above the key level of 1.35000 and looks for daily support.

GBP/USD: Key takeaways from today’s session

• Happening some hours ago, a better-than-expected US GDP result introduced some immediate GBP/USD selling pressure as the dollar strengthened.
• Otherwise, and following recent revelations surrounding the Bank of England and Federal Reserve monetary policy, cable downside remains somewhat limited.

GBP/USD: Shifting Bank of England narrative offers cable support

In a few words, markets are currently readjusting expectations of further GBP rate cuts, with the latest reduction to 4% signifying the fifth rate cut made by the BoE in 2025.

This change in narrative is at least in part thanks to a series of hawkish economic data points, most significantly a major outperformance in services PMI and hotter-than-expected inflation as part of data released last week.

This, especially regarding the latter, might offer the Bank of England an opportunity to pause, or even end easing efforts, should they deem appropriate in their upcoming September decision.

While the recent vote ultimately concluded with a rate reduction, the room was noticeably split, again adding to the rationale that the Bank of England is becoming increasingly hawkish, having already cut several times in 2025.

At least one outcome of the above is immediate support for GBP/USD, which goes double when markets overwhelmingly predict a 25 basis point cut will be the Federal Reserve’s next move on September 17th.

GBP/USD: UK-US yield spread case-in-point for monetary policy expectation

While expectations that the Bank of England is changing its stance on monetary policy remain ever-intangible in the market aether, comparing the current direction of UK-US yield spreads offers more concrete evidence of a shifting narrative.

US 2-Year bond yield (US02Y), TVC, TradingView, 28/08/2025

Best explained by recent price action in 2Y treasuries, Monday saw UK 2Y sovereign bond yields meet their highest level since April, while its US counterpart has fallen to 3-month lows.

GBP/USD: US PCE inflation to offer finale to week 35

While this week’s trading has been nothing to write home about regarding UK economic events, the same cannot be said for the United States, set to end the week with the infamous PCE inflation report.

Revered as the Fed’s ‘preferred’ measure of inflation, the Federal Reserve will hope to see inflation at, or lower than, consensus, especially considering expectations of a 25 bps in the upcoming decision.

• Core PCE Expenditures Index (MoM), Friday 28th September 2025, 08:30 NYC
• Core PCE Expenditures Index (YoY), Friday 28th September 2025, 08:30 NYC
• PCE Expenditures Index (YoY), Friday 28th September 2025, 08:30 NYC
• PCE Expenditures Index (YoY), Friday 28th September 2025, 08:30 NYC

GBP/USD, OANDA, TradingView, 28/08/2025

EURUSD: ⬆️ Buy

• EURUSD reversed from support zone
•  Likely to rise to resistance level 1.1755

EURUSD currency pair recently reversed from the support zone between the strong support level 1.1600 (which has been reversing the price from the start of August), 20-day moving average and the 38.2% Fibonacci correction of the upward impulse from July.

The upward reversal from this support zone created the daily Japanese candlesticks reversal pattern Hammer Doji.

Given the clear daily uptrend and the strongly bearish US dollar sentiment, EURUSD currency pair can be expected to rise to the next resistance level 1.1755 (which has been reversing the price from the start of July).

USDCAD: ⬇️ Sell

• USDCAD broke daily up channel
•  Likely to fall to support level 1.3715

USDCAD currency pair recently reversed down from the resistance zone between the resistance level 1.3900, upper daily Bollinger Band and the 38.2% Fibonacci correction of the downward impulse from February.

The price just broke the support trendline of the daily up channel from July – which should accelerate the active wave 2.

Given the clear daily downtrend, USDCAD currency pair can be expected to fall to the next support level 1.3715 (target price for the completion of the active wave 2).

NZDUSD: ⬆️ Buy

• NZDUSD reversed from support zone
• Likely to rise to resistance level 0.5980

NZDUSD currency pair recently reversed from the support zone between the strong support level 0.582 (former strong resistance from March and April), lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from April.

The upward reversal from this support zone created the daily Japanese candlesticks reversal pattern Morning Star – which started the active impulse wave (1).

Given the bearish US dollar sentiment seen across the FX markets today, NZDUSD currency pair can be expected to rise to the next resistance level 0.5980 (target price for the completion of the active impulse wave 1).

Nasdaq-100: ⬆️ Buy

• Nasdaq-100 reversed from support zone
• Likely to rise to resistance level 24000.00

Nasdaq-100 index recently reversed from the support zone between the strong support level 23000.00 (which has been reversing the price from the middle of July), lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from June.

The upward reversal from this support zone created the daily Japanese candlesticks reversal pattern Hammer – which started the active impulse wave (iii).

Given the strong daily uptrend, Nasdaq-100 index can be expected to rise to the next resistance level 24000.00 (which stopped the earlier impulse wave i).