Dollar Faces Dovish Test as Warsh Takes Stage at Jackson Hole
The US Dollar Index (DXY) has been trading near its lowest level since May, with the softness attributed more to the Treasury's move to double its buybacks of longer-dated debt rather than economic data.
Despite a flash Purchasing Managers Index (PMI) showing US activity accelerating, the Greenback remains under pressure. Gold prices surged to a three-month peak above $4,600 on Friday, while Crude Oil held near a four-week high amidst simmering Middle East tensions.
The coming week is expected to be eventful, with little happening in the first half of the week but significant developments later on. The Federal Reserve's preferred inflation gauge, the July Personal Consumption Expenditures (PCE) Price Index, will be released on Wednesday, followed by new Fed Chair Kevin Warsh's Jackson Hole keynote and a double-header from the US Bureau of Labor Statistics' preliminary annual benchmark revision to Nonfarm Payrolls on Friday.
Any dovish lean from Warsh or a heavy downward revision to the jobs numbers could deepen the slide in the Dollar. The Eurozone calendar will also be busy, with Germany's IFO survey and the final second-quarter Gross Domestic Product (GDP) reading on Tuesday, as well as flash August Harmonized Index of Consumer Prices (HICP) inflation on Friday.