Dollar Soars as Hawkish Fed Repricing Takes Hold

The US dollar has seen a significant boost in value following Fed Chair Kevin Warsh's hawkish tone at the Jackson Hole speech, pushing markets to reprice the probability of a September hike from roughly one-in-three to greater than 50/50.

This shift in market sentiment was driven by Warsh's emphasis on inflation as the key focus for the Fed, rather than economic growth. As a result, the dollar rose and the yield curve flattened.

The upcoming US jobs data will be crucial in testing whether this hawkish repricing can be sustained. The main event is Friday's nonfarm payrolls (NFP) report, which is expected to show a rebound to 58,000 after last month's surprisingly weak -23,000 print.