By Caroline Valetkevitch

NEW YORK (Reuters) -U.S. Treasury yields and the dollar eased on Tuesday as President Donald Trump’s move to fire a central bank governor raised concerns about the bank’s independence, while Wall Street stocks ended higher ahead of results from Nvidia on Wednesday.

Trump said on Monday he was firing Federal Reserve Governor Lisa Cook over claims of mortgage borrowing impropriety. Cook said Trump had no authority to fire her and she would not resign. Her term is due to end in 2038.

The unprecedented move by Trump could lead to a protracted legal battle that risks resetting norms for the central bank’s independence and a president’s involvement in monetary policy. Cook’s exit from the Fed could speed up Trump’s efforts to reshape the Federal Open Market Committee, which sets interest rate policy.

Trump has been pushing the Fed to cut rates to stimulate growth and reduce borrowing costs.

Expectations of a potentially more dovish Fed helped to send shorter-dated yields lower, while the yield curve steepened as the long end showed a more modest drop. Market participants said long-dated yields were likely to feel more upward pressure from political influence over the Fed, since a subsequent lowering of interest rates could increase worries about inflation, while foreign demand could be hit by fears over the Fed’s credibility.

Despite remaining inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for the Fed’s September policy meeting, encouraged by dovish signals from Fed Chair Jerome Powell, data pointing to labor market weakness and a shakeup at the central bank.

“On Friday, we had a major catalyst, which was a green light from the Fed to begin cutting rates. The market was waiting for that for a long time. Now the question becomes how much will they cut and how fast will they cut,” said Adam Sarhan, chief executive of 50 Park Investments in New York.

The dollar fell against major currencies in the wake of the Cook news.

“President Trump is undertaking a risky and possibly ineffective battle against the Fed. To get a majority of the FOMC to toe the Trump line would take seven voters, not just two or even four,” Brian Jacobsen, chief economist at Annex Wealth Management, wrote.

Trump has regularly threatened to dismiss Powell and this month he fired a top Labor Department official after accusing her, without evidence, of manipulating jobs data that had disappointed him. Trump has backed away from the threat against Powell as he gets closer to the expiration of his term next May.