#federal-reserve

#federal-reserve

The U.S. Federal Reserve confirmed yesterday that its trading desk did conduct a rare "rate check" on the exchange rate between the U.S. dollar and the Japanese yen on behalf of the White House earlier this year. The move is often regarded as a precursor to actively intervening in currency markets. In this case the implication would be that the U.S. Treasury wanted to strengthen the yen versus the dollar (or, vice versa, weaken the dollar versus the yen).

Unemployment remained little changed from December, falling slightly to 4.3% with 7.4 million people unemployed. Both of these figures are higher than they were a year ago, when the jobless rate was 4.0%, and the number of unemployed people was 6.9 million. The jobs report beat estimates; the unemployment rate fell, and the internals of the report were fine too.

The resilience of gold above $4,800 per ounce at this stage reflects a delicate and complex balance between traditional supporting factors and emerging pressures-one that cannot be superficially interpreted or reduced to the movement of the dollar alone. It is true that the U.S. dollar's retreat from its recent peaks, after failing to sustain its recovery momentum from a four-year low, provided gold with a short-term breather and attracted some buyers.

The newly-named Federal Reserve chairman faces an historic challenge that no predecessor has encountered since the years immediately following World War II. In that period, the gigantic spending required to aid our allies and secure military victory saddled the U.S. with towering debt. President Truman-fearing that huge interest costs would swamp the budget-heavily pressured the Fed to hold down rates. Today, the U.S. is wrestling with its biggest budget crisis in 70 years, and we're confronting a similar conundrum.

Dutta tells Axios: "I don't think people should change their investment plans around Warsh. The Fed is bigger than any one person. At the margin, Warsh represents a bit of uncertainty." One concern is that Warsh will cut interest rates now to appease Trump even if lower rates aren't warranted, which could result in the need for increases later on.

Stay out of elected politics. Don't get pulled into elected politics,

"It's easy to criticize government institutions in so many ways," he said. "I will tell whoever it is: You're about to meet the most qualified group of people you not only have ever worked with-you will ever work with-when you meet Fed staff. And not everybody's perfect, but there isn't a better cadre of professionals who are more dedicated to the public well-being than work at the Fed."

Warsh previously served as a Fed governor from 2006 to 2011 and is currently a partner at Duquesne Family Office alongside Stanley Druckenmiller. He is also a visiting fellow in economics at Stanford University's Hoover Institution. Warsh still could face a tough Senate confirmation after the Justice Department issued grand jury subpoenas as part of a probe into Powell, sparking bipartisan criticism.

Kevin Warsh is a qualified nominee with a deep understanding of monetary policy,