Dollar Slips as Warsh's Hawkish Comments Fuel Rate Hike Bets
The US dollar dropped slightly on Monday as markets reacted to hawkish comments from Federal Reserve Chair Kevin Warsh, who stated that policymakers would have work to do if they don't get the confidence that inflation is heading down to 2 per cent.
Warsh's remarks fueled bets on a September rate hike, with the implied probability of a move next month rising to 60 per cent. This has led to increased yields on interest-rate-sensitive 2-year US Treasury notes, which hovered just below a more than one-month high.
The euro and sterling rose against the dollar, with the euro up 0.16 per cent to $1.1602 and sterling at $1.3543. The dollar index, which measures the US currency against six major peers, was down 0.14 per cent to 99.51 after hitting a two-week high on Friday.
The yen remained under pressure, trading near the closely watched 160-per-dollar level. Renewed tensions in the Gulf drove oil prices higher, with Brent crude futures up 3.4 per cent on the day to $91.06 a barrel.