Trump says he doesn't plan to fire Federal Reserve chair Powell, Wall St bounces back

It's the topic Donald Trump can't seem to avoid — US Federal Reserve chair Jerome Powell. Specifically, his job security.

As Westpac senior economist Matas Vanagas wrote in his morning note, the ongoing uncertainty drove market sentiment overnight, 'with investors debating the implications of the Fed's loss of independence'.

This morning, the latest is the US president is making comments in an interview, saying he would love it if the central bank boss resigned, according to Reuters.

Overnight, a Bloomberg report suggested Mr Powell's replacement was imminent.

Later, Mr Trump denied the report but said he had polled Republicans on the idea.

'I don't rule out anything, but I think it's highly unlikely he will be fired unless he has to leave for fraud,' Mr Trump said, referencing a stoush over a cost overrun on the renovation of the Federal Reserve.

'A dismissal could lead to a legal showdown between the Federal Reserve and the president,' CBA's Joseph Capurso noted.

'The dismissal of Powell could have large consequences for global financial markets.

'Short-term US interest rates would fall as markets price rate cuts by a new FOMC. But medium- and long-term interest rates may lift to price in higher inflation.

'A risk premium in US interest rates and a risk discount in the USD is possible if market participants no longer believe that policymaking in the US is stable, predictable and independent of politics.'