CNH: USD/CNY Fixing Edges Up, Error Term Widens Again

The USD/CNY fix printed at 7.1108, versus a BBG market consensus of 7.1546. 

• This was a fresh low for the fixing back to early Nov last year. We continue to close the gap with this fixing level (7.0993 from Nov 6 last year).
• The fixing error was slightly tighter at -438pips.
• USD/CNH is lower post the fixing, testing back under 7.1500, we were close to 7.1550 prior to the fixing outcome. 

• CHINA SETS YUAN CENTRAL PARITY AT 7.1108 WEDS VS 7.1188

The question of why Trump would want to get rid of Fed Governor Cook is a good one because ironically she leans dovish and is also very bullish on AI’s productivity-enhancing capabilities and sees disinflationary potential. Below are some viewpoints as to what his end game might actually be and it relates back to Fed bank presidents.

• Andrew Ackerman on X: “Here's what's at stake in Cook's firing: creating a majority on the Fed board in Washington, which would allow Trump to replace all 12 regional Fed bank presidents early next year.”
• “That would guarantee that the 19-member Federal Open Market Committee consists of Trump loyalists, or at least those aligned with his views on lower rates.”
• “Firing Cook would make it easier for Trump to install more administration-friendly heads of the 12 regional Fed banks, who serve on the committee that sets interest rates. In February, all Fed bank presidents will be up for renewal, which a majority of the board would have to approve.”
• Jim Bianco on X: “Why is Trump firing Lisa Cook? It may be bigger than you think. A little-known fact is that all twelve Federal Reserve District Bank presidents serve five-year terms. They end in February of years ending in “1” and “6.” 
• “The Board of Governors can veto any Federal Reserve district bank president, and they are out by next February.”
• “With Cook out, Trump gets to appoint four governors (Bowman and Waller from Trump 1.0, Miran nomination, and Cook’s replacement), with one of them being Powell’s successor as chair, who would be at most risk? Austan Goolsbee, Chicago Federal Reserve President.”
• “Should this move survive legal challenges, we believe New York Federal Reserve President John Williams would be next. The Federal Open Market Committee (twelve district bank presidents and seven governors) would undergo a radical reconstruction, not unlike the Fed’s Washington building complex.”