Dollar strengthens, precious metals decline on Trump’s Fed selection
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More news: The US dollar strengthened on news that President Trump nominated Kevin Warsh to succeed Jerome Powell as chair of the US Federal Reserve, subject to Senate approval.
The dollar climbed 0.3% against a basket of its peers as of 8:00am ET on Friday (12:00am AEDT Saturday), while gold price dropped almost 5% to USD5,140 ($7339.56) a troy ounce, while silver fell 11% to USD103.24 per ounce.
Warsh is considered to be a conventional choice for the next Fed chair given his experience with the central bank and on Wall Street.
Trump nominates Kevin Warsh as next Federal Reserve chair
The news: US President Donald Trump has said he will nominate Kevin Warsh to succeed Jerome Powell when his term as Fed chair end in May.
The context: Trump, making the announcement via a post on Truth Social on Friday morning (11:45pm AEDT), wrote: “I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.”
He added: “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down. Congratulations Kevin!”
Warsh served on the US central bank’s Board of Governors from 2006 to 2011 – during the 2008 global financial crisis – and was passed over for the role in 2017 when Powell was tapped instead.
Should Warsh be confirmed by the Senate, he will enter the role at a time when the central bank’s independence is viewed by economists and investors to be under threat from political pressure.
During 2025, Warsh aligned himself more closely with Trump by pushing for lower interest rates, a shift from his reputation as an inflation hawk.
Powell has been under persistent pressure from Trump who has demanded aggressive rate cuts by the Fed, while the Department of Justice earlier this month issued subpoenas related to his congressional testimony about the Fed’s USD2.5 billion headquarters renovation. Powell described the move as a pretext to punish the central bank for not lowering rates more quickly.
The Supreme Court is also due to deliver a decision on whether to allow Trump to fire Fed governor Lisa Cook, after the administration accused Cook of fraudulently listing homes in Michigan and Georgia as “primary residences” in mortgage documents before joining the Fed in 2022.
The Fed left interest rates unchanged at between 3.5% and 3.75% on Thursday, in its first decision of 2026, resisting ongoing pressure from Donald Trump to slash borrowing costs. Fed officials said the US economy is “expanding at a solid pace” and noted the unemployment rate has “shown some signs of stabilisation”.
Inflation “remains somewhat elevated”, however, with core PCE inflation likely at 3% in December, Powell said.
Powell did not confirm whether he would remain on the Fed board after his term as chair ends during Thursday’s press conference.
The sources: Trump Truth Social, FT, Reuters, WSJ
