Dollar Strengthens Ahead of Fed Signals at Jackson Hole

The US dollar strengthened on Thursday as investors awaited signals from the Federal Reserve's monetary policy path at the Jackson Hole symposium. The dollar traded near a one-week high against several major currencies, with the US Dollar Index up around 0.3% this week after falling 0.8% last week.

The euro was steady at $1.1652, while sterling slipped 0.08% to $1.3587. The yen was little changed at 159.35 per dollar as traders continued to digest remarks from the Bank of Japan's deputy governor.

US President Donald Trump said on Wednesday that it was 'time to teach Canada that this is not acceptable,' just days after trade negotiations between the two countries collapsed. Markets are pricing in no change in borrowing costs in September, but see around a 70% probability that the Federal Reserve will raise interest rates by at least 25 basis points by December.

However, analysts said the dollar's upside could be limited if the central bank refrains from raising interest rates this year. The Treasury Department's attempt to contain rising long-term borrowing costs by increasing its purchases of longer-dated government debt has revived concerns about potential dollar depreciation amid growing worries over rising government debt and official intervention in financial markets.