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Dollar rises after Warsh comments, set for weekly gain

FedWatch pricing shifted, with expectations for at least a 25 basis-point September hike jumping to 57.5% after Warsh’s Jackson Hole remarks.

Reported · Written up by our desk · Major Pairs

The U.S. dollar climbed on Friday after Federal Reserve Chair Kevin Warsh signaled that interest rate hikes could be needed if inflation does not appear to be returning toward the Fed’s 2% target. The move put the greenback on track for its biggest daily gain in 2.5 months.

Money markets repriced following Warsh’s debut Jackson Hole speech, with CME FedWatch showing expectations for a rate hike of at least 25 basis points at the September meeting rising to 57.5% from about 35% before the remarks.

The dollar index rose 0.59% to 99.69, after briefly touching 99.727, its highest level since August 17. Against the euro, the greenback was off 0.59% at $1.1582, while the week-long outlook showed the dollar up nearly 0.9%, and the euro off about 0.8%.

The yen weakened too, with the dollar up 0.48% to 160.15 and on track for its third weekly gain in four weeks, supported by data showing Tokyo’s annual core inflation accelerated in August for a third straight month. Sterling fell 0.47% to $1.3528, and the Canadian dollar dropped 0.37% to C$1.39 per dollar.

Latest closeDollar index 99.11 ▲0.2%

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