Changes in the leadership of the Federal Reserve and the Bureau of Statistics have caused a crisis of trust, and assets in US dollars are under pressure.

Wall Street strategists and economists say that due to the credibility of U.S. government institutions being threatened, U.S. assets including the dollar are facing risks of further selling. With Federal Reserve Governor Adriana Kugler resigning last Friday, U.S. President Trump now has the opportunity to nominate her successor, a move that could weaken the influence of Federal Reserve Chairman Powell. Additionally, with Trump firing Bureau of Labor Statistics Director Erika McEntarfer last week, the market is concerned about the independence of economic data and monetary policy, potentially leading investors to lower their valuation of U.S. assets. These concerns have already impacted the dollar this year, with some funds transferring money out of U.S. bonds and stocks. Against the backdrop of signs of economic slowdown, concerns about the politicization of U.S. institutions are also escalating. Senior economist Robert Bergqvist from SEB Bank in Sweden said, "Unfortunately, we are witnessing new serious attempts to centralize more power in the White House. All of this demonstrates that holding different U.S. assets may require a higher risk premium." The release of U.S. July non-farm payroll data last Friday has led traders to increase bets on a Fed rate cut. Pricing in the currency market indicates that the likelihood of a Fed rate cut in September is higher than no cut. Elias Haddad, a strategist from Brown Brothers Harriman, said, "The credibility of U.S. policy-making is facing increasingly serious threats." He pointed out that Trump's pressure on Powell and his colleagues to cut rates "undermines the independence of the Federal Reserve." Although investors have long expected Trump to appoint a more dovish Federal Reserve chairman, implying a faster pace of rate cuts by the Fed after Powell's term ends next year, Kugler's resignation has accelerated this timeline. The new nominee selected by Trump could potentially take over as chairman after Powell's term ends in May next year. Furthermore, early announcement of the next Fed chair nominee could trigger a so-called "shadow chair" effect, with investors paying more attention to Trump's nominee than to Powell himself. Haddad also stated that the dismissal of Erika McEntarfer "may damage perceptions of the credibility of U.S. economic data." Macro strategist Mark Cudmore also said, "Trump's firing of the Labor Statistics Bureau director is a negative signal for the market regardlessthe data was either distorted as Trump claims, or once accurate but is now being politicized. In either case, the release of future data has been affected, and U.S. assets should reflect a higher risk premium." Derek Halpenny, global markets research director at MUFG in London, mentioned that among speculated successors to Powell, National Economic Council Director Kevin Hassett is the "most unfavorable choice for the dollar" due to his close relationship with the President. He added that Treasury Secretary Steven Mnuchin is also viewed negatively by the market due to his ties with Trump, although not as significantly as Hassett. Halpenny added that former Fed directors Kevin Warsh, and current directors Christopher Waller and Michelle Bowman are more market-friendly due to their experience at the central bank. He said, "Before the official announcement, investors' interest in buying back the dollar after last Friday's decline will remain limited." However, during the August holiday period with decreased liquidity, Trump's nomination of a replacement for Kugler as Federal Reserve governor will be an important risk event for the market. Trump stated on Sunday that he plans to announce successors for Kugler and McEntarfer in the coming days. The strategy team at Deutsche Bank led by Jim Reid pointed out, "Replacing Federal Reserve directors and the Bureau of Labor Statistics director may ultimately affect the financing difficulty of the U.S. 'twin deficits'." The team added, "This may hinder the rise of long-term bonds, unless there is significant economic slowdown."