Asian currencies remained largely steady on Monday, while the U.S. dollar weakened following the announcement of a criminal investigation involving Federal Reserve Chair Jerome Powell, casting uncertainty over the central bank’s independence.
The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, declined 0.2% from its one-month peak. Meanwhile, U.S. Dollar Index futures were also down 0.2% as of 04:27 GMT.
Fed Chair Powell faces threat of indictment
Investor confidence was rattled after Powell revealed that the administration had threatened the Federal Reserve with a potential criminal indictment related to his Senate testimony about cost overruns in the Fed’s headquarters renovation.
This development weakened trust in U.S. institutions and prompted a cautious mood across global markets, dampening risk appetite in Asia.
In this environment, most regional currencies showed little movement.
The Japanese yen’s USD/JPY pair edged up 0.2%, while the Singapore dollar’s USD/SGD remained flat.
The South Korean won stood out, rising 0.7% on Monday.
In China, the onshore yuan’s USD/CNY pair was mostly unchanged, whereas the offshore yuan’s USD/CNH dipped slightly by 0.1%.
The Indian rupee’s USD/INR pair saw minimal change.
Meanwhile, the Australian dollar’s AUD/USD pair rose modestly by 0.2%.
US jobs data bolster expectations for Fed rate cuts
Investor sentiment was also shaped by U.S. economic data released last Friday, which revealed that nonfarm payroll growth in December slowed more than anticipated.
The weaker-than-expected hiring numbers have heightened expectations that the Federal Reserve may implement interest rate cuts later this year.
Market pricing now factors in at least one additional Fed rate cut in 2026, with some traders anticipating two reductions.
Attention is now turning to the U.S. consumer price index for December, due Tuesday, a key economic indicator ahead of the Fed’s upcoming policy meeting later this month.
Sources: Investing
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