Dollar Surges as Warsh Stokes Rate Hike Bets

The US dollar staged a strong comeback during the week ending August 28 due to hawkish hints from Fed Chair Kevin Warsh at the Jackson Hole symposium.

Warsh emphasized that underlying inflation trends had not meaningfully improved, boosting rate hike expectations. According to the CME FedWatch tool, the likelihood of a quarter-percentage Fed rate hike in September increased from 41% on August 24 to 57% by August 28.

The dollar index (DXY), which measures the dollar's strength against a basket of six currencies, climbed from a low of 98.86 on Monday to a two-week high of 99.73 on Friday.