Daily Forex Highlights — May 19

🎯 Top Story

🇺🇸 Warsh to be sworn in as Fed chair on Friday, ceremony led by Trump

What happened: Kevin Warsh will be sworn in as Federal Reserve chair on Friday. President Trump will preside over the ceremony.

Why it matters: The Fed leadership transition is now imminent. Markets have already priced in Warsh's "strict independence" stance.

Market impact: Neutral to bullish for the dollar. Policy continuity is expected.

🔥 Quick Takes

💵 Dollar

🇺🇸 Warsh to be sworn in Friday → See Top Story.

🇺🇸 Fed's Goolsbee: Cutting rates too much would trigger more inflation → Hawkish tilt. Markets should not expect aggressive easing.

🇺🇸 UK increased Treasury holdings in March; China and Japan reduced holdings → International demand for US debt remains solid.

💶 Euro

🇩🇪 Bundesbank president: We can do many things to calm markets and provide positive momentum → Signaling policy flexibility.

🇪🇺 EU Commissioner Dombrovskis: EU will lower growth forecasts and raise inflation projections due to Iran conflict → Stagflation risks are rising across Europe.

🇫🇷 France finance minister: G7 agrees IMF and World Bank need to boost aid to vulnerable countries → International coordination on war-related economic damage.

💷 Pound

🇬🇧 Deputy PM says Starmer will not set a resignation timeline → Contradicts previous media reports. Political uncertainty remains.

🇬🇧 IMF: Sees 2026 UK GDP at 1.0 percent, up from 0.8 percent in April; inflation to peak below 4 percent by end 2026, returning to 2 percent by end 2027 → Upgraded growth, but inflation still a concern.

💴 Yen

🇯🇵 Japanese official: Japan has intervention capacity in savings and cash → Jawboning. Markets watching for actual action.

🇯🇵 Finance Minister Katayama: Will take appropriate measures on FX moves → Verbal intervention. No concrete action yet.

🇯🇵 Chief Cabinet Secretary Kihara: Closely watching price trends amid Middle East situation → Inflation vigilance.

🇯🇵 Economy Minister Shiokawa: Does not rule out extra budget for urgent and necessary measures → Fiscal expansion possible. Near-term yen weakness may persist.

🇯🇵 Senior MOF official questions selling Treasuries to support yen, warns intervention could backfire → Internal debate on intervention strategy. Uncertainty on policy approach.

🌏 Other

🇭🇺 Hungary PM Magyar: Hungary aims to adopt the euro; will reduce budget deficit, will not support austerity → Long-term euro adoption goal, but no immediate catalyst.

🇦🇺 RBA Assistant Governor Hunt: Recent oil price rise poses especially difficult challenges. Risk of rising inflation expectations is high → Hawkish tilt. RBA watching oil closely.

🇸🇪 Riksbank: FX swap and spot market liquidity still seen as良好; has worsened slightly over past six months → Watching liquidity conditions.

🇹🇭 Thai joint business group: Keeps 2026 GDP forecast at 1.2-1.6 percent; sees 2026 inflation at 2.0-3.0 percent → Slow growth, contained inflation.

🇮🇩 BI Governor: No specific target level for rupiah. Rupiah typically under pressure in April-June, then strengthens in July-August → Seasonal guidance. Markets may anticipate year-end strength.

🇦🇺 RBA minutes: Members expect inflation to return to target without further tightening; growth may stay below potential → Dovish lean. No rate hike expected.

🇮🇩 Reuters poll: 9 of 16 economists expect BI to hike 25 bps to 5.00 percent in May; median forecast sees BI 7-day reverse repo rate at 5.00 percent by end 2026, up from 4.75 percent in April survey → Hawkish expectations building.

📊 Key Data Snapshot

💡 Final Take

Three themes stand out today: Warsh sworn in as Fed chair, IMF upgrading UK growth, and hawkish BI expectations.

💵 Dollar: Warsh will be sworn in on Friday with Trump presiding. Goolsbee warned that cutting too much would trigger more inflation. The UK increased its Treasury holdings in March while China and Japan reduced theirs. The dollar remains well-supported.

💷 Pound: Deputy PM says Starmer will not set a resignation timeline, contradicting earlier media reports. The IMF upgraded its 2026 UK GDP forecast to 1.0 percent from 0.8 percent but sees inflation peaking below 4 percent by year-end. Mixed signals.

💴 Yen: Japanese officials are talking up intervention capacity. Katayama said he will take appropriate measures. But a senior MOF official questioned whether selling Treasuries to support the yen could backfire. The government is divided on intervention strategy.

🌏 Others: The Reuters poll shows 9 of 16 economists expect BI to hike in May. RBA minutes suggest no further tightening is needed. Hungary aims to adopt the euro. Thailand sees slow growth. Diverging policy paths continue.

Final takeaway: The Fed leadership transition is imminent. Goolsbee is leaning hawkish. The IMF sees higher UK growth but also higher inflation. BI is expected to hike. Japan is debating intervention strategy.

🔮 Looking Ahead

Warsh swearing-in ceremony on Friday

More Fed speakers — will they echo Goolsbee?

BOJ intervention — words or action?

BI rate decision in May

RBA policy signals from minutes