Dollar Fluctuates Ahead of Jackson Hole Symposium as Investors Remain Cautious

The US dollar (USD) index has been fluctuating within a narrow channel above 99.00 as investors remain cautious ahead of the Jackson Hole Symposium, where Fed Chair Kevin Warsh will deliver a speech on Friday.

On Wednesday, the Bureau of Economic Analysis reported that the Personal Consumption Expenditure (PCE) Price Index rose by 3.7% on a yearly basis, while the core PCE Price Index increased by 3.3%, both matching June's readings. The US dollar index edged higher following these releases and closed the day in positive territory.

Strategists at Deutsche Bank argue that the latest data is hard to square with a view that Fed policy is restrictive, noting that there was greater repricing of Fed expectations further out, with 42bps of hikes now being priced by next June. In rates, this shift left 2yr Treasury yields +3.6bps higher at 4.21%, while the sell-off was more modest at the long-end.