U.S. dollar rises; Powell says Fed is “insulated” from political pressures

The U.S. dollar rose on Wednesday in Asia. U.S. Federal Reserve chairman Jerome Powell’s comments were in focus today as he said the central bank is “insulated” from political pressures.

The U.S. dollar index gained 0.2% to 95.808 by 12:25 AM ET (04:25 GMT).

“The Fed is insulated from short-term political pressures – what is often referred to as our ‘independence,’” Powell said on Tuesday.

His comments came amid fresh criticism from Trump on Monday.

“Despite a Federal Reserve that doesn’t know what it is doing – raised rates far too fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in U.S. history,” the President tweeted.

In the past, Trump has openly pressured Powell and his colleagues to loosen policy, saying lower rates would give an added boost to an economy.

The gains in U.S. dollar today were limited, as traders remained cautious to take new positions ahead of the crucial G-20 summit this coming Friday.

U.S. President Donald Trump and Chinese leader Xi Jinping are expected to meet on the sidelines of the summit to discuss trade-related issues.

Trump said he expected a productive meeting with Xi, but markets do not expect a trade deal would be reached this weekend.

Meanwhile, the AUD/USD pair was up 0.2% to 0.6964. Australian Prime Minister Scott Morrison warned that countries should not “just sit back and passively await our fate” amid the ongoing Sino-U.S. trade war.

“The collateral damage is spreading,” Morrison said in a speech. “The global trading system is under real pressure. Global growth projections are being wound back.”

Australia is vulnerable to heightening trade tension between the U.S. and China, its biggest trading partner.

The USD/CNY pair also gained 0.2% to 6.8897.

The USD/JPY pair was up 0.3% to 107.47.