🎯 Top Story

Warsh confirmation vote set for Tuesday; dollar gets medium-term support

What happened: The Senate is expected to vote on Tuesday to confirm Warsh as a Fed governor for a 14-year term. A separate vote on his four-year term as chair could come as early as Wednesday.

Why it matters: Warsh is moving closer to taking over. Markets have already priced in his "strict independence" stance. Less uncertainty on Fed leadership is a net positive for the dollar.Market impact: Bullish for the dollar in the medium term. The transition looks smooth.

🔥 Quick Takes

Dollar

1. Hassett: Powell may leave after the inspector general's report is released → Leadership uncertainty is creeping back in. But the market's focus is on Warsh now.
2. US April existing home sales miss forecasts, but improving affordability offers some support → Mixed housing data. Neutral for the dollar.
3. Warsh confirmation vote set for Tuesday; chair vote likely Wednesday → See Top Story.

Euro

1. ECB's Knot: A rate hike in the near future is unavoidable unless the situation improves markedly → A strong hawkish signal. Supports the euro.

Pound

1. Starmer fails to calm party tensions; Labour lawmakers from different factions call for him to step down → Political crisis brewing. Near-term pressure on sterling.
2. UK lawmaker West drops immediate leadership challenge but pushes for an "orderly transition" with the prime minister stepping down in September → Uncertainty drags on, but "orderly transition" talk calms some nerves.
3. BOE's Greene: Worth waiting to see how the Iran war evolves before deciding on a rate hike. Inflation risks are "entirely to the upside." → Hawkish lean, but no rush. The bar for a hike remains high.

Yen

1. Japanese government panel urges BOJ to proceed cautiously on rate hikes, citing risks to corporate financing → Official pressure to go slow. Near-term drag on the yen.
2. Japan finance minister says he is coordinating with Bessent on forex policy → US-Japan communication channels are open. Lower risk of surprise intervention.
3. Japan finance minister Katayama: It is hard to judge the outlook for June. Cannot comment on the possibility of a BOJ rate hike in June. → Deliberately vague. No clear signal for markets.
4. BOJ April meeting summary: One member said with real rates still notably low, the BOJ should continue raising its policy rate → A hawkish voice remains inside the board. Some support for the yen.
5. Japanese government panel urges BOJ to proceed cautiously → A repeat. The message is clear: Tokyo wants a slow pace.

Other

1. India government source: US officials expected to visit soon for trade talks, dates not set → Potential positive for the rupee. Trade progress would help.
2. Bank of Israel deputy governor: The central bank still expects up to two 25bp rate cuts by March next year → A clear easing path. Bearish for the shekel.
3. Russia cuts 2026 GDP forecast to 0.4 percent from 1.3 percent → Economic outlook darkening. Bearish for the rouble.
4. Iran central bank imposes forex trading restrictions to protect reserves → Capital controls are tightening. The rial remains under severe pressure.
5. PBOC: Will continue to implement moderately loose monetary policy; enhance forward-looking, flexible and targeted measures → A dovish signal. The yuan is under some pressure.
6. PBOC: Close attention needed on the impact of imported inflation on the domestic economy → Concern over imported price pressures. May lead to policy responses.

📊 Key Data Snapshot

💡 Final Take

• Three themes are moving FX markets today: Fed leadership transition, UK political turmoil, and BOJ policy division.Dollar: Warsh is moving through confirmation quickly. Markets have priced him in. Medium-term support for the dollar is intact. Powell stepping down speculation adds some noise, but not much.
• Pound: Labour's infighting is getting worse. Lawmakers want Starmer out. "Orderly transition" talk helps a little, but uncertainty is high. Greene sounds hawkish but is in no rush to hike.
• Yen: The government panel wants the BOJ to go slow. Katayama is vague on June. But one BOJ member still wants more hikes. The central bank is split. The yen lacks a clear near-term driver.
• Others: Russia cut its growth forecast sharply. China is signaling more easing. Iran tightened capital controls. Policy paths across countries continue to diverge.
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Final takeaway: 

The dollar has medium-term support from a smooth leadership transition. Sterling is under political pressure. The yen is stuck between a cautious government and a hawkish minority at the BOJ.

🔮 Looking Ahead

• Warsh confirmation vote results (Tuesday and Wednesday)
• Will UK Labour's infighting escalate further?
• More policy signals from the BOJ ahead of the June meeting
• Russia's economic data following the GDP forecast cut
• US-India trade talks progress