*

Powell calls threat of indictment a pretext to pressure

rates

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Dollar falls broadly, S&P 500 futures down 0.5%

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Gold breaches $4,600 an ounce as Iran unrest escalates

(Updates to Asia afternoon)

By Tom Westbrook

SINGAPORE, Jan 12 (Reuters) - The dollar slipped and

U.S. equity futures eased on Monday after Federal Reserve Chair

Jerome Powell said the Trump administration threatened him with

a criminal indictment, stoking worries about the central bank's

independence.

S&P 500 futures were down 0.5% and gold hit ‌another

record high in the immediate reaction to the escalation of the

tussle between U.S. President Donald Trump and the Fed.

The Swiss franc strengthened 0.4% to 0.7979 per

dollar and ​the euro was 0.17% firmer at $1.1656. Traders

said the news was unsettling, though the immediate implication

for interest rates was not ‍clear.

Fed funds futures have added in about three basis points

more in cuts this year, ⁠which is small but points ⁠to the risk

that the Fed gets pushed into being more aggressive.

Gold struck a record high of more than $4,600 an ounce, also

buoyed by geopolitical tensions as unrest ‌in Iran lifted

precious metal prices and supported oil.

European stock futures inched ​lower although Asian

stocks rose on Monday led by the technology

sector after data on Friday showed the U.S. labour market was

not rapidly deteriorating even as employment growth slowed.

Japanese markets were closed for a ⁠holiday.

TRUMP VS POWELL

On Sunday, Powell said the Trump administration had

threatened ‍him with a ​criminal indictment and served grand jury

subpoenas over Congressional testimony he gave last summer

regarding a Fed building renovation project, an action he called

a "pretext" aimed at pressuring the central bank to cut interest

rates.

The developments amount to a ‍dramatic escalation in the

fight between Powell and Trump, which dates back to the banker's

first years as chair in 2018.

"Trump is pulling at the loose threads of central bank

independence," said Andrew Lilley, chief rates strategist at

Barrenjoey, an investment bank based in Sydney.

"The only reason that he's taking these steps is that he

knows that he's not going to take control of the Fed, so he

wants to exert as much undue pressure as he can.

"Investors won't be happy about it, but it shows ​actually

Trump has ‍no other levers to pull. The cash rate will stay what

the majority of the FOMC wants them to be."

DOLLAR IN CROSSHAIRS

The dollar had the sharpest reaction, falling even against

typically risk-sensitive currencies like the Australian and ​New

Zealand dollars. The dollar index was 0.3% lower and on

track for the biggest one-day decline since mid-December.

The dollar had a miserable 2025, dropping more than 9%

against major peers due to shrinking interest rate differentials

as the Fed cut rates and as concerns about U.S. fiscal deficits

and political uncertainty swirled.

"This open warfare between the Fed and the U.S.

administration ... it's clearly not a good look for the U.S.

dollar," said National Australia Bank's ( NAUBF ) head of currency

strategy, Ray Attrill.

Elsewhere, Trump's threats to intervene in Iran, where

protests against the clerical establishment appear to be

intensifying, helped ​oil prices hold recent gains and underlined

the swirling geopolitical risks for the year ahead.

After sharp gains in recent sessions, benchmark Brent crude

futures were down about 40 cents to $62.90 a barrel.

The second full week of the New Year will include U.S.

inflation data, trade figures from China and a slew of U.S.

earnings ‍beginning with JPMorgan Chase ( JPM ) and BNY on

Tuesday.