Markets hoping for US-Iran peace talks. But new Fed Chair could trigger volatility.



Markets are tentatively hopeful that Iran will join the next round of peace talks with the US in Pakistan.

• SP500 +0.1%

• Gold (XAUUSD+) -0.7%

• US dollar index (DXY) steady

• Brent Oil (UKOUSD) -0.5%

• Bitcoin (BTCUSDT) -0.2%

Of course, the latest developments surrounding the Iran war remain the primary driver across global financial markets.

According to President Trump, the current US-Iran ceasefire is set to expire "Wednesday evening Washington time".





However, here's another major event that could rock markets ...

The new Fed Chair is set to attend his Senate confirmation hearing today.





Who's set to become the next Fed Chair?



Back in January, US President Donald Trump picked Kevin Warsh to be the next chair of the Federal Reserve - the US central bank.

Warsh is set to replace Jerome Powell, whose term expires May 15th.





When is the hearing?



Tuesday, April 21, at 2:00PM UTC.





Why should traders care?



After the Middle East conflict, this is the next big event for markets.

After all, the Federal Reserve is the world's most influential central bank.

The Fed's job is to manage inflation and job growth in the world's largest economy.

Warsh is set to lay out his vision for "regime change" at the Fed—and that could shake things up.

Also ...

Today's Senate hearing would mark the first time that Warsh would publicly comment on his outlook for Fed rates.





What does Warsh want to do?



Warsh wants to cut interest rates and slash the Fed's $6.6 trillion balance sheet and betting that AI will boost productivity and keep inflation low.

However, such ambitions have been muddied by the surge in oil prices following the Middle East conflict.





Will Warsh get the job?



It's not so straightforward.

Warsh's nomination comes during an immensely politically-charged era for the Fed.

Note that President Trump has already launched a criminal investigation into Chair Jerome Powell, while attempting to fire a Fed governor, Lisa Cook.

Also, Senator Thom Tillis - a key Republican voter on the Senate committee - has vowed not to approve Warsh, or any other appointee, until the DOJ's (Department of Justice) criminal probe into Chair Powell is complete.





Which assets could move?



The US Dollar could rock FX markets, as markets react to Warsh's views on US interest rates, Fed independence, and balance sheet policy.

Note that the global FX market is huge: US$ 9.6 trillion worth of currencies are traded around the world every single day.



POTENTIAL SCENARIOS:

• UPSIDE: The US dollar could rise (EURUSD+, GBPUSD+, etc. could fall) if Warsh points to Fed rates staying higher to combat inflation risks, while upholding the Fed's independence.

• DOWNSIDE: The US dollar could fall (EURUSD+, GBPUSD+, etc. could rise) if Warsh hints that he may be more receptive to President Trump's preference for lower interest rates, risking the Fed's independence and reinvoking the "sell America" trade.



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READ MORE (published Monday, April 20): GBPUSD+ listed among "3 Assets to Watch" this week, including price targets.