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The US dollar has strengthened following reports that Kevin Warsh will be nominated as the next Fed chair, while precious metals prices have fallen.
The dollar index has risen by 0.35% this morning, with gains against the British pound and the euro.
That indicates that Warsh is being seen as a relatively hawkish choice, compared to the other candidates on the slate.
Sonu Varghese, global macro strategist at Carson Group in Chicago, says:
“If the nominee is indeed Warsh, we could actually end up with a Fed that tilts hawkish at the margin.”
Gold, though, is down 4% at $5,168 an ounce. Yesterday it soared to a record high of almost $5,600/oz before dropping in volatile trading.
The odds of Kevin Warsh being nominated as the next chair of the Federal Reserve have collapsed, as punters have piled in.
Warsh is now a 93% chance of getting the nod from Donald Trump, according to predictions site Polymarket.
That’s up from 32% at the start of the week, when BlackRock fixed income chief Rick Rieder was briefly the front-runner.
The Financial Times have nailed their trousers to the mast, declaring that Donald Trump is preparing to nominate former Federal Reserve governor Kevin Warsh to replace Jay Powell as Fed chair, citing three sources.
They write:
Warsh — who was the youngest Fed governor ever when he joined the central bank in 2006 — is known for his connections on Wall Street and in Washington policymaking circles.
While he has a long-standing relationship with the president, some viewed his hawkish stance during his time at the Fed as a big obstacle to winning Trump’s trust.
Warsh, who has advocated for “regime change” at the central bank, has said the Fed should reduce the size of its vast balance sheet — something Treasury secretary Scott Bessent also supports.
The identity of the next person to run America’s central bank – and face firm pressure from Donald Trump to cut interest rates – could be revealed today.
President Trump told reporters last night that he would announce a successor to Federal Reserve Chair Jerome Powell on Friday morning
Trump hinted that it would be “somebody that could have been there a few years ago … I think it’s going to be a very good choice. I hope so.”
A source later told Reuters that Trump had met with former Fed Governor Kevin Warsh at the White House.
Warsh, who interviewed for the job in 2017, is a critic of the Fed, which he says needs “regime change” to regain lost credibility.
Whoever Trump picks will needs to be confirmed by a Senate majority.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s eurozone GDP day, when we discover how the European single currency bloc’s economies are faring.
And France has got the festivities off to a modest start, with data showing it grew by 0.2% in October-December.
That’s down from 0.5% in the third quarter of last year, and in line with forecasts.
Statistics body INSEE reports that:
French final domestic demand slowed down slightly.
Investment also slowed, but household consumption accelerated moderately (up to +0.3% after +0.1%).
Foreign trade made another positive contribution to growth in the fourth quarter. Exports slowed down significantly (+0.9%, down fromr +3.2%), while imports fell back sharply (-1.7% after +1.5%).
And for the year, the euro zone’s second-biggest economy grew 0.9% over the course of 2025, a faster pace than the 0.7% expected by the government.
6.30am GMT: France Q4 2025 GDP report
8am GMT: Spain Q4 2025 GDP report
9am GMT: German Q4 2025 GDP report
9am GMT: Italy Q4 2025 GDP report
10am GMT: Eurozone Q4 2025 GDP report
1.30pm GMT: Canada’s November GDP report
1.30pm GMT: US PPI (producer price inflation) data for December