US President Donald Trump is scheduled to interview Federal Reserve Governor Christopher Waller for the top position at the Federal Reserve on Wednesday. Waller joins National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh, who have also been interviewed for the role.
In July, Waller supported a rate cut, citing concerns about the labour market. According to a Wall Street Journal poll in October, Waller ranked highly among economists due to his consistent arguments for rate cuts.
Role Of The Federal Reserve
Despite his stance, his prospects seem slim due to a lack of a personal relationship with Trump. The Federal Reserve is responsible for shaping US monetary policy aimed at price stability and full employment, primarily through adjusting interest rates.
The Fed holds eight policy meetings annually, where the Federal Open Market Committee makes monetary policy decisions. In extreme situations, the Fed may use Quantitative Easing (QE) to increase credit flow, affecting the US Dollar.
Quantitative Tightening (QT) is the process where the Fed reduces its bond purchases, influencing the value of the US Dollar. These economic mechanisms are integral to the US financial system and impact the global economy.
The news that President Trump is interviewing Christopher Waller for the top Fed job signals a major potential shift in monetary policy. Waller is known for his dovish stance, meaning he favors lower interest rates to support the economy. This development significantly increases the probability of rate cuts in the first half of 2026, which would likely weaken the US Dollar.
Market Implications
This dovish outlook is supported by recent economic data that we’ve been watching. The latest November 2025 jobs report showed a notable slowdown, with non-farm payrolls missing expectations and the unemployment rate ticking up to 4.2%. Furthermore, the most recent CPI inflation reading fell to 2.1%, giving the Fed more room to ease policy without worrying about prices.
For us, this points toward positioning for a weaker dollar and lower interest rate expectations in the coming weeks. We should consider using options on currency futures, such as buying puts on the Dollar Index (DXY) or calls on EUR/USD and GBP/USD. Interest rate futures also present an opportunity, as markets will begin pricing in a more aggressive cutting cycle for 2026.
However, Waller is not a guaranteed choice, which introduces significant uncertainty into the market. This suggests that implied volatility in forex options is likely undervalued and could rise sharply on any announcement. Therefore, strategies that profit from large price swings in either direction could be prudent until a final decision is made.
We have seen this kind of political pressure on the Fed before, particularly in the 2018-2019 period. During that time, presidential comments created sharp, short-term moves in the dollar and equity markets. We expect similar headline-driven volatility as the selection process continues, regardless of the final candidate chosen.
