Dollar Index Soars as Warsh Boosts Rate Hike Odds

Fed Chair Warsh's hawkish comments sent the dollar index soaring to a two-week high on Friday, finishing up by 0.61%. The dollar jumped on his warning that inflation is not meaningfully slowing and vowing policymakers will return it to their 2% target.

Warsh's speech boosted the chance of a Fed rate hike at next month's FOMC meeting to 57% from 36% before he spoke. This increase in probability also weighed on precious metals, with October COMEX gold plummeting to a one-week low and settling sharply lower by 2.88%, while September COMEX silver finished down by 3.51%.

The University of Michigan's US August consumer sentiment index was revised upward by 0.7 to 51.7, stronger than expectations of no change at 51.0. However, an unexpected downward revision to US 2026 nonfarm payrolls showed a weaker labor market than previously stated, a dovish factor for Fed policy.