Lisa Cook – Dollar Plunge: How a Shocking Jobs Report and a Potential New Fed Voice Are Reshaping Markets

Immediate Market Impact

In a stunning reversal, the U.S. dollar dramatically retreated against the Korean Won, wiping out its recent gains and plunging back below the psychologically significant 1,400-won barrier. This sharp movement was a direct response to a deeply disappointing U.S. employment report for July, which forced markets to radically rethink the future of American interest rates.

The report, far from showing steady growth, revealed an economic “optical illusion.” While 73,000 new jobs were added in July—already well below expectations—the real shock came from massive downward revisions for May and June. Previously reported figures, which had shown robust growth of over 140,000 jobs each month, were slashed to a mere 10,000 each. This revision effectively erased nearly all the job growth initially thought to have occurred in that period.

The news sent immediate shockwaves through global markets. In Seoul, the dollar-won exchange rate, which had been trading as high as ₩1,407.4, went into a freefall, at one point crashing to ₩1,384.5—a staggering single-day drop of nearly 23 won. U.S. Treasury yields tumbled, and the broader U.S. dollar index weakened as investors rushed to price in a much more dovish Federal Reserve.

This reaction is critical because the Fed had been publicly distancing itself from interest rate cuts, citing a labor market it believed was “still holding up well.” This report fundamentally undermines that stance. The possibility of a rate cut at the Fed’s September meeting soared, with some analysts even speculating about a aggressive “big cut” of 50 basis points.

Three Key Implications of the Jobs Shock

1. A Data Reliability Crisis: The drastic revisions suggest potential structural issues in how U.S. employment data is compiled. Experts point to reduced statistical personnel and mass layoffs in certain sectors as possible causes for the confusion, indicating the strong numbers of the past may have been a mirage.
2. Forcing the Fed’s Hand: Fed Chair Jerome Powell had just days earlier stated that employment was healthy. This report, encompassing three weak months of data, is powerful enough to change that judgment. Key Fed officials, including influential Governor Christopher Waller, now have concrete evidence to argue for cuts based on deteriorating employment. New York Fed President John Williams confirmed this shift, stating he is now “open to a September cut.” All eyes are now on Chair Powell’s speech at the late-August Jackson Hole Economic Symposium for confirmation of this new, more cautious tone.
3. Re-evaluating Tariff Policies: The shock was so severe that it is forcing a market re-evaluation of the economic impact of ongoing trade wars. The dark cloud over the U.S. economy strengthens the argument that aggressive tariff policies are causing tangible harm, potentially giving President Trump reason to seek additional agreements or back down from further escalation, which would further weaken the dollar.

The Lisa Cook Variable: A New Wild Card

Amidst this turmoil, a new political variable emerged that could accelerate the Fed’s dovish pivot. Early Saturday, it was announced that Fed Board Member Kurt Kugler would be resigning effective August 8th.

This vacancy is significant because it allows President Trump to appoint a new governor much earlier than anticipated. Under U.S. law, the Fed Chair must be selected from among the sitting Board members. This open seat is a golden opportunity for Trump to place a loyalist who aligns with his public demands for lower interest rates, with an eye on the next Fed Chairmanship when Powell’s term ends.

The name immediately circulating in policy circles is Lisa Cook, a Michigan State University economist who has been publicly critical of current interest rate policy and has argued for a more proactive approach to fighting racial economic disparities. Her potential nomination is seen as a direct move to install a strong voice for monetary easing at the heart of the Fed.

If a Trump nominee like Cook is confirmed, they would serve alongside Chair Powell for several months, creating a board dynamic intensely focused on cutting rates. This political pressure adds a powerful new layer of uncertainty, making the case for a weaker dollar even more compelling. While markets often reverse their initial reactions to employment data the following week, the combination of a terrible report and this new political pressure suggests this dollar sell-off may have lasting power.