Dollar Rebounds on Inflation Data as Jackson Hole Looms
The US dollar has made a strong rebound after recent losses, boosted by July's personal consumption expenditures (PCE) inflation data and income/spending figures. The PCE inflation rate rose 0.2% in July and 3.7% from a year earlier, while underlying services inflation remained firm. This increase in inflation gave households room to rebuild savings as personal income outpaced spending.
The US dollar index (DXY) has recovered about half of last week's losses, trading near 99.24, with the pound remaining relatively stable against a stronger dollar. The Canadian dollar, however, has fallen to a one-week low due to trade tensions between Washington and Ottawa, which have capped its recent recovery.
The Jackson Hole economic symposium is expected to provide key insights from Kevin Warsh, who may retain his cautious communication style, leaving the next move in monetary policy uncertain. If Warsh gives a clear hawkish signal, it could extend the dollar's rebound through resistance at 99.50 and the psychological 100.00 level.