Dollar Steady Ahead of Jackson Hole as Won Gains on BOK Rate Hike

The U.S. dollar was steady on Thursday as investors waited for Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole conference, which is expected to provide clues about interest rates and monetary policy.

Last week, the greenback had shed nearly 1% due to a sell-off in U.S. Treasury bonds amid concerns over inflation and debt levels. However, this week it has recovered somewhat, driven by the debasement trade, which involves investors moving out of fiat currencies and into hard assets like gold or cryptocurrency.

The core personal consumption expenditures (PCE) price index rose 0.2% month-over-month in July, matching expectations, but the annual reading remained at 3.3%, significantly above the Fed's target of 2%. The second estimate of U.S. real gross domestic product growth for Q2 was unchanged at 1.5%, suggesting a resilient economy and sticky inflation.

The Bank of Korea (BoK) raised its benchmark rate to 3.00% on Thursday, following a quarter-point hike in the previous quarter. The BoK also increased its 2026 economic growth forecast to 3.3% from 2.6%. As a result, the South Korean won gained against the dollar.

According to Thierry Wizman, global FX and rates strategist at Macquarie, Fed Chair Warsh is likely to deliver a structurally hawkish speech at Jackson Hole, which could lead to a stronger dollar and a flattening of the curve. This could also help stocks rise.