Political Uncertainty Weighs on the Dollar but Lifts Gold and U.S. Equities

Market Overview

Markets swung sharply on news that President Trump is seeking to dismiss a Federal Reserve governor, fueling political uncertainty. Despite the shock, U.S. equities displayed remarkable resilience. After dipping earlier in the session, all three major indexes rebounded into positive territory.

The dollar index fell to its intraday low following the announcement. Gold staged a strong “V-shaped” reversal, recovering from a fresh daily low to a two-week high, highlighting its safe-haven appeal. Crude oil futures retreated more than 2%, snapping a four-day winning streak and pulling back from a three-week high. In crypto, Bitcoin rebounded over $2,000 after briefly breaking below $109,000 to hit a one-month low, while Ethereum surged more than 6% at one point.

Hot Topics to Watch

Core Capital Goods Orders Post Fastest Growth in Nearly Three Years

Despite a drag from volatile aircraft orders that pushed Julys headline durable goods orders lower for a second straight month, core capital goods orders rose 1.06%. This marked the fastest pace in nearly three years, signaling that underlying corporate demand for equipment and expansion remains firm, easing concerns of an economic slowdown.

French Stocks Tumble Amid Political Uncertainty

French equities slid nearly 2% as the government faced a confidence vote. Société Générale fell almost 7%, while the France–Germany bond yield spread widened to a four-month high. Renewed domestic political turmoil rattled investor confidence in both France and the broader eurozone. Analysts warned that political risk has become a new driver of volatility in European equities, and prolonged instability could further deter capital inflows.

Key Events Ahead

22:30 (GMT+8) – U.S. EIA Weekly Crude Oil Inventories (to Aug 22)

00:45 (GMT+8, Overnight) – Richmond Fed President Thomas Barkin (2027 FOMC voter) speaks