The U.S. dollar stayed close to an eight‑day peak on Thursday, driven by fresh inflation data that kept the prospect of a Federal Reserve rate hike alive through the end of the year. The move comes as the Jackson Hole symposium of central bankers prepares to begin later in the day, offering another venue for policy clues.
Inflation figures keep the Fed on the table
According to the Commerce Department, the Personal Consumption Expenditures (PCE) price index rose 3.7% over the 12 months ending in July, matching the previous month’s reading and edging just above the 3.6% forecast of economists surveyed by Reuters. On a month‑to‑month basis, the index increased 0.2%, versus the 0.1% increase analysts had expected, after a 0.1% dip in June.
These numbers left market participants weighing the likelihood of a Fed rate hike before year‑end. Westpac economist Ryan Wells noted that Chairman Kevin Warsh’s upcoming speech at the Jackson Hole conference would serve as “the ultimate test” for the market’s expectations.
Dollar index climbs, yen under watch
The dollar index, which measures the greenback against a basket of major currencies, rose 0.21% to 99.13 – its highest level since August 19. Against the Japanese yen, the dollar traded at 159.23, having given back most of the gains from recent intervention but still well above the multi‑decade low near 164.
Traders are awaiting a speech by Bank of Japan Deputy Governor Ryozo Himino, scheduled for 0130 GMT, for hints on whether the BOJ will raise rates in September. Mitsubishi UFJ Bank senior analyst Akihiko Yokoo said that if Himino repeats language used in January 2025 – indicating policymakers would “discuss and decide whether to raise interest rates” – it would likely be read as a strong signal of a September hike. Nonetheless, Yokoo expects active yen buying to remain limited given the upcoming remarks from both Himino and Warsh.
Market pricing and other currency moves
Money‑market data from broker Totan Tanshi shows an 87% probability that the BOJ will raise rates next month. Meanwhile, the Canadian dollar held steady at C$1.388 per U.S. dollar. President Donald Trump recently told reporters it was “time to teach Canada you can’t do this anymore,” following a breakdown in trade negotiations between the two nations.
The euro traded at $1.1655 and the British pound at $1.3592. The Australian dollar gained 0.18% to $0.7181, while New Zealand’s kiwi rose 0.1% to $0.5948.
Cryptocurrency tickers
Bitcoin edged up 0.55% to $78,874.60, and ether increased 1.07% to $2,498.35.
Overall, the combination of solid inflation data and upcoming central‑bank speeches keeps investors focused on the trajectory of monetary policy both in the United States and abroad, with the dollar’s strength reflecting confidence in a potentially tighter policy stance.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
