Dollar Rises as Warsh Suggests Potential Rate Hikes

The U.S. dollar rose to a session high after Federal Reserve Chair Kevin Warsh hinted at potential interest rate hikes in his speech at the Jackson Hole symposium of central bankers.

Warsh's comments suggested that policymakers may need to take action if they doubt that inflation is headed back towards the Fed's 2% target. This sentiment sparked expectations for a rate hike of at least 25 basis points at the September meeting, with probabilities jumping to about 50% from around 35% prior to the speech.

Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut, said that Warsh's comments were not particularly new or substantive. He noted that if the Fed doesn't follow through on its promises again, market credibility may be eroded.