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Kevin Warsh Sworn In as Fed Chair, Dollar Repricing Ahead
President Trump swears in Kevin Warsh as Fed chair on Friday. The event removes policy uncertainty and sets the stage for a repricing of rate differentials that could lift the dollar against low-yielding currencies.
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President Donald Trump will swear in Kevin Warsh as Federal Reserve chair on Friday. The ceremony formalizes the end of a leadership vacuum at the central bank and opens a new chapter for monetary policy. Markets now face a repricing of the rate path as traders calibrate expectations to Warsh's policy preferences.
From the Rate Path to the Dollar
The core transmission runs through short-term real yields. A Fed chair perceived as more hawkish tends to keep the policy rate elevated, which lifts the dollar's carry advantage. Low-yielding currencies such as the Japanese yen and Swiss franc face the most direct pressure. The EUR/USD pair could test support if the hawkish repricing takes hold.
Forex Positioning in Play
Positioning data from the latest COT report shows speculative dollar longs have been trimmed in recent weeks. A hawkish shift in expectations could trigger fresh buying as leveraged accounts rebuild bullish exposure. The forex correlation matrix currently ties the dollar inversely to equity indices, meaning a stronger greenback may weigh on risk assets and commodity currencies like the Australian dollar and New Zealand dollar.