USD: Markets temper USD-bearish bets on Fed probe – ING

FXStreet Insights Team FXStreet

Markets have started to rethink some of their USD-bearish Fed independence bets, following several pushbacks against the Department of Justice's probe into Jerome Powell from Republican lawmakers. Senator Thom Tillis went as far as saying he’ll oppose the next Chair nominee until the matter is resolved, while Treasury Secretary Scott Bessent reportedly flagged the financial market implications of the investigation to Trump, ING's FX analyst Francesco Pesole notes.

Republican pushback eases political pressure on Powell

"Investors will keep seeking reassurance – ideally from Trump or the DoJ – but the risks of another rapid drop have abated. If the investigation is dropped, there’s a decent chance the dollar may come out stronger from this story. That’s because markets might then perceive Powell as more legitimized (if nothing else to prove a point) in adopting a hawkish stance."

"Anyway, nerves appear calmer enough today to re-focus on data. We think the dollar faces some upside risks from what we anticipate will be a hotter-than-expected 0.4% MoM December core CPI print (consensus 0.3%). Because of the shutdown, more data collection occurred later in November 2025, a period when Thanksgiving-related discounting is common. Compared with the full month of November 2024, this timing likely skewed that inflation reading lower. Reverting to more standard collection timings in December means risks of a hotter read."

"A chunk of hawkish repricing already occurred last Friday after the jobs data, and markets increased implied cut probability on the back of the Fed investigation story. This means the upside for the dollar is not huge, but could allow USD crosses to keep edging back towards last Friday’s close."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD edges higher despite delaying BoE rate hike expectations

GBP/USD inches higher after two days of losses, trading around 1.3600 during the Asian hours. However, the British Pound may encounter headwinds as recent declines in Brent crude oil prices ease immediate inflation concerns. This shift has led money markets to push back expectations for the Bank of England's next interest rate hike from late 2026 into early 2027.

EUR/USD gains on hawkish ECB policy outlook

EUR/USD edges higher after registering minor gains in the previous day, trading around 1.1650 during the Asian hours. The pair gains ground, bolstered by the European Central Bank’s hawkish monetary policy outlook.

Gold resumes profit-taking pullback before Warsh’s Jackson Hole speech

Gold is back in the red below $4,600 early Friday, resuming its corrective decline from 15-week highs of $4,697 earlier this week. Gold bulls are consolidating the upside, awaiting Federal Reserve (Fed) Chairman Kevin Warsh’s debut at the annual Jackson Hole Symposium.

Pi holds steady as Core Team focuses on distributed AI infrastructure

Pi Network (PI) price hovers above $0.0900 on Friday, sustaining the mild 3% gains recorded over the last two days. Pi Core Team announced the launch of new SoloHost apps, OpenClaw and Atlassian MCP Server, on Thursday, in hopes of expanding the Pi ecosystem. PI token must reclaim the $0.1000 psychological threshold for a sustained recovery.

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September. The Jackson Hole symposium, held from August 27 to 29, has the official theme “Financial Innovation: Implications for Payments and Policy.”

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve (Fed) Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September.