Euro and Swiss franc rally as Fed independence returns to spotlight

The euro and Swiss franc strengthened against the U.S. dollar after reports that the Trump administration threatened Federal Reserve Chair Jerome Powell with a criminal indictment and Powell said the Department of Justice served the Fed with grand jury subpoenas.

The euro and the Swiss franc strengthened against the U.S. dollar following reports that the Trump administration threatened Federal Reserve Chair Jerome Powell with a criminal indictment. Powell said the Department of Justice had served the Federal Reserve with grand jury subpoenas related to his Senate testimony. Financial markets reacted with a weaker dollar and higher gold prices. Powell's term as Fed Chair runs until May 2026, and he can remain a Fed governor until January 2028. Key developments: - Powell reported that the Department of Justice served the Federal Reserve with grand jury subpoenas tied to his testimony before the Senate Banking Committee. - The euro rose about 0.41% to 1.1684 and the Swiss franc gained about 0.42% against the dollar, while the dollar index fell roughly 0.35%, snapping a five-day winning streak. - Gold moved to a record price after Powell released remarks defending central bank independence. - Economists and strategists cited a higher U.S. dollar risk premium as markets weigh potential implications for Fed decision-making. Summary: The immediate market impact included gains for safe-haven currencies and a softer dollar, reflecting renewed scrutiny of Fed independence. Undetermined at this time.