Dollar Holds Steady as Markets Await Warsh's Jackson Hole Speech

The US dollar held steady near its one-week high against major peers on Friday as investors waited for clues from Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium.

Warsh's remarks are expected to provide insight into his policy approach and how he plans to tame inflation. However, some market participants remain cautious due to his opposition to providing explicit forward guidance on interest rates.

The euro and sterling were subdued near one-week lows against the dollar, last trading at $1.1652 and $1.3597 respectively. The yen was little changed at 159.34 per dollar, having surrendered part of its intervention-driven gains.

Market strategists are now focused on Warsh's Jackson Hole remarks for clues on how he will approach monetary policy. Sim Moh Siong, FX strategist at OCBC, noted that 'uncertainty over the Fed's reaction function and concerns that policymakers may be placing less emphasis on inflation control have increased market focus on Chair Warsh's Jackson Hole remarks.'

Traders are pricing in a 35% chance of a rate hike at the September meeting, rising to 75% by December. Treasury yields remain elevated, with those on benchmark US 10-year notes last trading at 4.676%. In contrast, cryptocurrencies saw a 0.5% gain for Bitcoin, which is on track for its biggest monthly gain since late 2024.