US Dollar Holds Near One-Week High as Investors Await Warsh’s Jackson Hole Debut
Market Overview and Key Drivers
By Jiaxing Li
Dollar Performance Against Major Currencies
HONG KONG, Aug 28 (Reuters) - The U.S. dollar held flat near a one-week high against major peers on Friday, as investors stood on the sidelines ahead of Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium for clues on his policy outlook.
The euro and sterling were subdued near one-week lows against the greenback, last at $1.1652 and $1.3597, respectively, though both remained on track for a second straight monthly gain.
The yen was little changed at 159.34 per dollar, having surrendered part of its intervention-driven gains, but it was still headed for a 1.3% monthly rise.
The dollar index, which measures the currency against six major peers, was little changed at 99.13 in early Asian trade.
Impact of Treasury Actions and Market Sentiment
It has risen 0.3% this week but remains on track for a second straight monthly decline of 0.7% after U.S. Treasury Secretary Scott Bessent said the Treasury would increase buybacks of longer-dated bonds. That has fuelled concerns that efforts to suppress borrowing costs could debase the dollar.
Focus on Jackson Hole and Federal Reserve Policy
Market participants are now keenly awaiting Warsh's debut speech in Jackson Hole, Wyoming, for clues on how he would approach monetary policy and tame inflation, although those expectations were tempered by his opposition to providing explicit forward guidance on rates.
Fed Officials’ Views and Market Reactions
Some other Fed officials reiterated on Thursday their ongoing concerns about U.S. inflation and signalled they were open to rate hikes.
"Uncertainty over the Fed's reaction function and concerns that policymakers may be placing less emphasis on inflation control have increased market focus on Chair Warsh's Jackson Hole remarks," Sim Moh Siong, FX strategist at OCBC, said in a note.
Potential Scenarios for the Dollar
For the dollar to weaken meaningfully following the Treasury's buyback announcement, markets would need evidence that the Fed was prepared to help contain Treasury yields, though this appeared unlikely, he added.
Traders were pricing in roughly 35% odds of a rate hike at the Fed's September meeting, rising to 75% by December. Treasury yields remain elevated, with those on benchmark U.S. 10-year notes last at 4.676%.
Other Currency and Commodity Moves
Cryptocurrency and Commodity Updates
In cryptocurrencies, bitcoin gained 0.5% to $80,620.33, on track for a nearly 30% gain in August that would be its biggest monthly gain since late 2024.
Performance of Other Major Currencies
The Australian dollar was up nearly 0.1% to hit a three-month high of $0.72 as rate hike bets built up. The New Zealand dollar climbed 0.2% to $0.5960.
The Canadian dollar held flat at $1.3844 and was heading for a second month of decline after trade tensions with the U.S. escalated further.
Oil Market Developments
Elsewhere, Brent crude futures hovered near $90 a barrel after a Wall Street Journal report suggested President Donald Trump had rejected the idea of re-establishing the terms of the memorandum of understanding the U.S. signed with Iran in June.
(Reporting by Jiaxing Li; Editing by Jamie Freed)