US Dollar Surges on Hawkish Fed Expectations
The US dollar has seen a surge in value following hawkish comments from Kevin Warsh at Jackson Hole, significantly increasing market expectations of a Federal Reserve rate hike in September. According to Brown Brothers Harriman's Elias Haddad, Fed funds futures now price a 60% chance of a 25bps move on the 16th of September, with short-term Treasury yields also rising.
Fed funds futures imply 60bps of tightening over the next twelve months, and this pricing will remain elevated until the September meeting. The upcoming US August ISM and jobs data are seen as crucial in keeping a September hike in play, underpinning the dollar's value.
The July JOLTS report is due on Tuesday, which should reinforce the low-hire, low-fire backdrop of the labor market. Thursday's employment data from Revelio Labs will also be closely watched, with its correlation coefficient to the NFP survey at 0.74.