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Dollar inches higher after Jackson Hole remarks as hike risk rises

The US Dollar Index is up about 0.3% since Friday’s open, while 2-year Treasury yields jumped sharply, signaling increased near term rate expectations.

Reported · Written up by our desk · Major Pairs

MUFG’s Derek Halpenny said the US dollar has gained modestly after Federal Reserve Chair Kevin Warsh’s Jackson Hole speech, with the US Dollar Index (DXY) rising about 0.3% since Friday’s open.

Halpenny pointed to Warsh’s focus on inflation not falling fast enough to warrant relief, which shifted perceived risks toward a potential rate hike, though he added that the Fed’s recent caution and upcoming US data could keep expectations more mixed.

FXStreet noted that the 2-year Treasury yield move has been sharp, while Halpenny said the limited reaction also makes sense given that other G10 central banks are meeting this month, some expected to hike and others on hold.

He also warned that if energy prices stay elevated or keep rising, global central bankers’ rhetoric is likely to remain hawkish, which could weigh on the appeal of aggressive dollar buying in the near term.

Latest closeDollar index 99.36 ▲0.2%

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