SINGAPORE: U.S. stocks futures and the dollar dropped on Friday following Federal Reserve Chair Jerome Powell’s statement that the Trump administration had threatened him with criminal indictment. Powell’s comments have stoked concerns over the independence of the U.S. central bank, causing investor uncertainty.
S&P 500 futures fell by 0.5%, while European futures slipped by 0.1%. The dollar was roughly 0.2% lower against most major currencies, dropping below 158 yen and standing at $1.1660 per euro. Investors reacted nervously, though the immediate impact on U.S. interest rates remained unclear. Treasury futures saw a slight uptick, implying a yield of 4.15%, slightly below the previous session’s close.
Gold prices reached a record high of over $4,600 per ounce, boosted by rising tensions in Iran and supporting oil prices. Powell’s comments, made on Sunday, revealed that the Trump administration had served him with grand jury subpoenas in relation to his testimony last summer regarding a Fed building renovation project. Powell called the actions a “pretext” to pressure the central bank into cutting interest rates.
This latest escalation marks a significant intensification in the ongoing feud between Powell and President Trump, which has existed since Powell first took office in 2018. “Trump is pulling at the loose threads of central bank independence,” said Andrew Lilley, Chief Rates Strategist at Barrenjoey, a Sydney-based investment bank. “The only reason that he’s taking these steps is that he knows he can’t control the Fed, so he wants to exert as much undue pressure as he can.”
The dollar’s fall was most notable against risk-sensitive currencies like the Australian and New Zealand dollars, and it helped the yen strengthen, avoiding intervention risk. “This open warfare between the Fed and the U.S. administration… it’s clearly not a good look for the U.S. dollar,” said Ray Attrill, head of currency strategy at National Australia Bank.
Meanwhile, U.S. President Trump’s potential intervention in Iran, where protests against the clerical government have intensified, helped sustain oil price gains, underlining geopolitical risks for the year ahead. Despite the recent upward momentum, Brent crude futures saw a slight dip of 40 cents, settling at $62.90 a barrel.
Asian markets showed mixed performance, with MSCI’s broadest index of Asia-Pacific shares, excluding Japan, inching 0.5% higher. Japan’s markets were closed for a holiday. The second full week of the year will feature key U.S. inflation data, trade figures from China, and earnings reports starting with JPMorgan Chase and BNY Mellon on Tuesday.
