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Dollar Index steadies near 99.20 ahead of Warsh speech

Investors are also weighing stronger US inflation data, with December rate hike odds at 74% per CME FedWatch and a 65% chance the Fed holds in September.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the US dollar against six major currencies, was holding steady around 99.20 in Asian trading on Friday after minor losses in the prior session, with support coming as investors turned cautious ahead of Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium, where markets seek signals on the future path of US interest rates.

According to FXStreet, stronger-than-expected US inflation data released earlier this week has reinforced expectations for another rate hike before year end. The CME FedWatch Tool was indicating a 74% probability of a December increase, while pricing also showed a 65% chance the Fed will keep rates unchanged at its September meeting.

FXStreet also pointed to growing concerns around a potential US debt crisis and longer term weakness in the dollar, including after the US Treasury expanded its debt buyback program. Scotiabank strategists said the recent dollar strength looks counter to the prevailing downtrend, and they flagged attention on whether the index can retest the mid 99 area near term.

The outlet cited a separate hawkish message from Fed’s Hammack, noting the speech received an 8 out of 10 score on the FXS Speechtracker versus a baseline of 7.5 out of 10. FXStreet added that dollar technical levels remain mixed, with the index trading below its 50-day exponential moving average while holding near the short term nine day EMA pivot.

Latest closeDollar index 99.11 ▲0.2%

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