Warsh's First Fed Meeting Threatens FX Carry Trades as Dollar Holds Little Changed in 2026
Updated
Updated · Bloomberg · Jun 3
Warsh's First Fed Meeting Threatens FX Carry Trades as Dollar Holds Little Changed in 2026
3 articles · Updated · Bloomberg · Jun 3
Summary
Kevin Warsh’s first Federal Reserve policy meeting this month could jolt foreign-exchange markets and disrupt crowded carry and relative-value trades, Morgan Stanley said.
The bank argues the risk is elevated because the dollar has stayed little changed this year, damping volatility across major currencies and encouraging investors to lean into those strategies.
That calm has persisted even as oil prices have surged and global bond markets have sold off in response to the Middle East conflict.
A policy surprise from Warsh’s debut meeting could therefore break an unusually stable FX backdrop that traders have treated as supportive for carry positions.