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Dollar nears one-week high as Warsh focus drives DXY rebound
Markets are pricing a higher chance of Fed action by September, while ECB minutes point to a likely September rate increase.
The US dollar is climbing toward a one-week high, with traders watching for Kevin Warsh's first speech at the Jackson Hole symposium on August 28, according to Yahoo Finance.
Despite sticky July PCE inflation, markets are increasingly concerned about the Fed's potential for continued tightening. Futures imply a 35% chance the Fed will act by September, rising toward 75% when looking out to December, and Warsh's lack of traditional forward guidance has added to uncertainty.
The euro is supported by a more hawkish policy backdrop. Yahoo Finance notes that ECB July minutes suggested another interest rate increase was likely, with a potential move from 2.25% to 2.50% in September, after the inflation picture showed little material progress.
Sterling faces a less hawkish outlook, the outlet added. It points to only a 15% chance of a Bank of England rate increase in September, with a quarter-point move not expected until around February 2027, while July inflation was cited as 2.9% and labor market conditions showed softness.