Dollar Strengthens as Warsh Hints at Rate Hike in September

The US dollar strengthened against major currencies after Federal Reserve chief Kevin Warsh's speech at the Jackson Hole symposium, where he hinted at a possible interest rate hike in September. Speaking on Friday, Warsh emphasized that the Fed must see convincing evidence of underlying inflation moving towards its 2% target before easing policy further.

Warsh's comments sent yields on short-term US Treasury bonds higher, with investors increasing their bets for a rate hike. Currently, US inflation is at 3.7%, significantly above the Fed's target.

The hawkish tone of Warsh's speech weighed on US equities, with the S&P 500 falling 0.3% and the Nasdaq declining 0.5%. However, European markets moved in the opposite direction, with the CAC 40 in Paris gaining 1% and Frankfurt's DAX rising 0.8%.