investingLive Asia-Pacific FX news wrap: Trump attacks Fed, Powell attacks back

• Yuan’s rally lacks fundamental support despite 2025 gains, former SAFE regulator says
• US hosts G7 talks on rare earths to counter China’s supply dominance
• UK hiring weakens again as wage growth stays firm, complicating BoE outlook
• Trump threatens to block Exxon from Venezuela after CEO calls country uninvestable
• PBOC sets USD/ CNY reference rate for today at 7.0108 (vs. estimate at 6.9849)
• Gold and silver surge, stocks & USD slammed on news of Trump’s ongoing attacks on the Fed
• Fed Chair Powell calls out Trump on his witch hunt, part of ongoing threats against Bank
• NYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutiny
• Wall Street Journal: “U.S. Steps Up Planning for Possible Action in Iran”
• Globex trade is open for the week, US equity index futures with small gap down
• EUR wobbles – France budget at risk as confidence votes threaten government collapse
• ICYMI: Japan’s PM Takaichi is considering calling a snap election for mid-February
• Monday open indicative forex prices, 12 January 2026

Weekend:

• Europe moves to boost NATO Arctic presence to counter Trump’s Greenland rhetoric/threat
• Trump orders special forces to draft Greenland invasion plan – UK Sunday Daily Mail report
• Newsquawk Week Ahead: US Earnings, US CPI, US Retail Sales, UK GDP, and China Trade
• Trump floats one-year 10% credit-card rate cap, offers zero enforcement detail, just talk

Summary:

• USD slides on Fed independence fears: Dollar fell sharply after Powell said the Justice Department issued grand jury subpoenas, reviving concerns over political pressure on the Federal Reserve.

• Markets turn defensive: Gold and silver surged, US equity futures fell, and risk sentiment weakened as institutional risk re-entered pricing.

• Senate pushback escalates: Senator Thom Tillis said he will block confirmation of any Fed nominee until the investigation into Powell is resolved, raising leadership uncertainty.

• Oil supported by Iran risks: Crude prices rose on fears protests in Iran could disrupt up to 1.9 mbpd of exports, though gains were capped by Venezuela uncertainty.

• Trump–Exxon tensions resurface: Trump said he may block Exxon from investing in Venezuela after the company’s CEO called the country “uninvestable.”

The US dollar suffered its sharpest setback in almost three weeks after Federal Reserve Chair Jerome Powell disclosed that the central bank had received grand jury subpoenas from the Justice Department. Powell characterised the move as a politically motivated attempt by the Trump administration to influence monetary policy, reviving long-standing concerns around Federal Reserve independence.

The remarks rattled markets. The Bloomberg Dollar Spot Index fell around 0.2%, US equity index futures moved lower, and strategists warned that renewed institutional risk could undermine the greenback. The dollar weakened broadly against G10 peers, though it later clawed back ground against a notably weak yen, while gold and silver surged sharply as investors sought protection from political and policy uncertainty.

Political fallout intensified when Republican Senator Thom Tillis, a senior member of the Senate Banking Committee, said he would block confirmation of any Federal Reserve nominee, including the next Fed chair, until the legal maters are resolved. Tillis said the episode removed any doubt that efforts were under way to erode Fed independence, adding that the credibility of the Justice Department itself was now at stake. Note that if a successor is not confirmed, Powell would remain in the role beyond the end of his current term.

In commodities, oil prices extended gains as rising protests in Iran stoked concerns over potential supply disruptions from the OPEC producer. Analysts noted calls for oil workers to down tools, warning that as much as 1.9 million barrels per day of Iranian exports could be at risk if unrest escalates. President Donald Trump added to the geopolitical backdrop, saying the US has “strong options” to respond to any Iranian attack with overwhelming force.

Trump said he may block Exxon Mobil from investing in the country after the company’s CEO described Venezuela as “uninvestable,” underscoring the political and legal risks that continue to complicate any rapid recovery in Venezuelan oil output.

Note the weekend news above, plenty of Arctic geopolitics!

Asia-Pac
stocks:

• Japan
  (Nikkei 225) +1.6%
• Hong
  Kong (Hang Seng) +0.86%
• Shanghai
  Composite +0.75%
• Australia
  (S&P/ASX 200) +0.41%

This is real, Trump on his ‘Truth’ app:

This article was written by Eamonn Sheridan at investinglive.com.