The U.S. dollar regained strength, approaching a one-month high during early Asian trading on Wednesday, following U.S. CPI data that aligned closely with expectations. This development bolstered the belief that the Federal Reserve is likely to maintain its current stance later this month, even amid significant pressure from the White House to reduce interest rates. The U.S. dollar index, which gauges the strength of the greenback against a selection of six currencies, was last observed up 0.3% at 99.18, recovering from losses incurred on Monday following U.S. President Donald Trump’s threat of a criminal indictment against Fed Chair Jerome Powell. On Tuesday, global central bank leaders and prominent CEOs from major Wall Street banks expressed their backing for Powell.

“There’s a very loud chorus of opinion coming from politicians, former Fed chairmen and other officials that Fed independence is sacrosanct and cannot be interfered with,” said Brian Martin. “It risks having adverse consequences of higher inflation, higher funding costs for the government and more volatility in economic activity,” he stated during a podcast. Markets are exercising caution: They are refraining from making hasty conclusions, and I believe that sound judgment will prevail, ensuring the independence of the Fed remains intact. On Tuesday, data indicated that U.S. consumer prices rose by 0.3% in December relative to the prior month, driven by increased expenses for rents and food, as certain distortions from the government shutdown that had previously suppressed inflation in November began to reverse.

The report solidified anticipations that the Federal Reserve will maintain interest rates at their current levels this month, as Fed funds futures are now reflecting a 95.6% implied probability that the U.S. central bank will opt to stay on hold when its upcoming two-day meeting wraps up on 28 January, consistent with the previous day, according to the source. “Indirect attacks on the Fed’s independence aren’t likely to roil the financial markets in the U.S., so long as inflation there remains under control,” stated experts. Volatility in most currency pairs remained low during early Asian trading as market participants awaited a potential Supreme Court decision regarding the legality of Trump’s emergency tariffs. It has the potential to govern them effectively, and if that is the case, we simply proceed forward. “We suspect they will be struck down, and we’ll probably still just move on,” analysts wrote in a research report. The Treasury market demonstrates a notable ability to remain largely indifferent to various factors.

Against the yen, the U.S. dollar remained steady at 159.025 yen, showing minimal movement following the Reuters Tankan poll, which indicated that Japanese manufacturers’ confidence dipped to a six-month low in January, though it remains in positive territory. The yen had previously declined to its lowest levels since January 2024 amid speculation that Japanese Prime Minister Sanae Takaichi might initiate parliamentary elections to strengthen her authority. The report indicated on Wednesday that she is contemplating calling for snap lower house elections on February 8. In the offshore market in Hong Kong, the U.S. dollar remained steady against the Chinese yuan at 6.9708 yuan, just before the upcoming release of December’s Chinese trade data in a few hours. The Australian dollar was recently noted at an increase of 0.1%, reaching $0.6688, while the New Zealand dollar also saw a slight rise of 0.1%, now at $0.5740. The euro remained unchanged at $1.1642, and the British pound also stayed stable at $1.3423. Bitcoin increased by 1.8% to $95,751.99, reaching its highest point in two months, while ether saw a rise of 4.0% to $3,334.46.