①The criminal investigation launched by the U.S. Department of Justice against Federal Reserve Chair Powell has exacerbated already strained relations between the Federal Reserve and the White House; ②Global markets were also quickly impacted during Monday’s Asian trading session: the U.S. Dollar Index plummeted, U.S. stock futures declined across the board, while spot gold prices surged past the $4,600 mark.
CLS News Agency, January 12 (Editor: Xiao Xiang) The criminal investigation launched by the U.S. Department of Justice against Federal Reserve Chair Powell has exacerbated already strained relations between the Federal Reserve and the White House. Global markets were also quickly impacted during Monday’s Asian trading session: the U.S. Dollar Index plummeted, U.S. stock futures declined across the board, while spot gold prices surged past the $4,600 mark.
Market data showed that the ICE U.S. Dollar Index, which measures the dollar’s exchange rate against six currencies, fell 0.3% during the Asian session, dropping below the 99 level to trade at 98.89, halting a four-day winning streak.
“Powell has grown weary of accusations from onlookers and has clearly gone on the offensive,” said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney. “The public confrontation between the Federal Reserve and the U.S. government—understood literally based on Powell’s statements—is obviously negative for the dollar.”
According to CLS News Agency reports, informed officials revealed that the U.S. Attorney’s Office for the District of Columbia has launched a criminal investigation into Federal Reserve Chair Powell concerning the renovation project at the Federal Reserve’s Washington headquarters and whether Powell made false statements to Congress about the scale of the project.
In a rare video address released by the Federal Reserve on Sunday, Powell delivered a strong rebuttal, describing the investigation as “unprecedented” and questioning its motives. He firmly stated that he would not be intimidated by political pressure while performing his duties as Chairman. Powell emphasized that this is fundamentally about whether the Federal Reserve can continue to set interest rates based on evidence and economic conditions or if monetary policy will be swayed by political pressure or intimidation.
In the futures market, U.S. stock futures also fell early in the session. Dow Jones Industrial Average futures dropped more than 200 points, S&P 500 futures fell 0.5%, and Nasdaq 100 futures slid 0.7% as investors sold off in search of safe havens amid escalating tensions between Trump and the Federal Reserve.
Jay Woods, Chief Market Strategist at Freedom Capital Markets, noted, “The market has experienced similar situations before and deeply detests them. The current issue goes beyond Powell personally—it concerns the independence of the Federal Reserve. Therefore, when such news breaks, the market instinctively reacts with selling.”
The CME Volatility Index (VIX), known as Wall Street’s fear gauge, rose during early trading, reflecting increased hedging activity by traders in the options market following news of the investigation into Powell.
Meanwhile, safe-haven assets strengthened during the session. Spot gold prices rose 2% intraday, briefly breaking above $4,600, while the Swiss franc, a safe-haven currency, gained 0.5%.
“The investigation into Powell is undoubtedly not a good thing for the Federal Reserve, the U.S. government, or the entire U.S. market,” said Nick Twidale, Chief Market Analyst at AT Global Markets. “Powell’s statements have been very tough, and it appears he is willing to confront the president head-on.”
This debate over the Federal Reserve’s independence comes as U.S. stock markets hit new record highs last week. Both the S&P 500 Index and the Dow Jones Industrial Average closed at all-time highs on Friday, capping a rally during the first full trading week of the new year. The S&P 500 rose more than 1% for the week, while the Dow and the Nasdaq Composite surged 2.3% and 1.9%, respectively.
Traders are also preparing for the start of a new earnings season on Wall Street, with major banks set to release their results in the coming days. JPMorgan, Bank of America, Morgan Stanley, and Goldman Sachs are all scheduled to report earnings, offering investors fresh insights into consumer spending, merger and acquisition activity, and trading revenue health.
Additionally, the latest U.S. inflation data, due for release on Tuesday, is garnering significant attention—last Friday’s December nonfarm payroll report showed that the U.S. labor market continues to cool but remains resilient enough to support stable economic operations. Meanwhile, the U.S. Supreme Court could rule as early as Wednesday on the legality of Trump’s tariffs.
Editor/Jayden
