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2h ago

Dollar Whipsaws After Warsh Nomination as Metals Tumble

Analysts attribute the swings to policy uncertainty, Fed independence concerns, de-dollarization efforts.

Single-family homes line the streets on January 14 in Thousand Oaks, California.
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Overview

  • Following a yearlong slide of more than 10% in some measures, the greenback rebounded late last week after President Trump nominated Kevin Warsh to lead the Federal Reserve.
  • The dollar’s rebound triggered a metals selloff, with gold posting its biggest daily fall since the early 1980s and silver extending steep losses into Monday.
  • Money markets still anticipate Fed easing later in 2026, with investors penciling in cuts around midyear if Warsh is confirmed, keeping dollar pricing fluid.
  • Mixed signals from the White House and Treasury on currency policy and worries about politicizing the Fed have introduced a visible policy risk premium into the dollar.
  • Trade partners are hedging and diversifying exposure—signing new agreements, expanding yuan use, and buying gold—after the dollar touched 2022 lows versus several rivals last week.