Dollar Corrects Lower as Treasury Yields Rise
A hawkish speech by Fed Chair Kevin Warsh at Jackson Hole last week sent the US dollar higher and lifted the probability of a September rate hike. However, after Treasury Secretary Scott Bessent's comments downplayed concerns about rising Treasury yields, the greenback corrected lower against major currencies.
The USD fell 0.31% against the CAD and 0.27% against the EUR, while declines against the JPY (0.19%) and CHF (0.11%) were more modest. Bessent noted that the Federal Reserve traditionally does not raise rates in response to a supply shock.
The market-implied probability of a September hike was little changed, but his comment could provide Chair Warsh with some justification to delay tightening. However, monetary policy is decided by the full FOMC, and several Fed officials continue to lean toward a rate increase.