Dollar Surges as Warsh Warns of Persistent Inflation

US Treasury yields rose sharply after Federal Reserve Chair Warsh's hawkish remarks at the Jackson Hole symposium, pushing market pricing for a September Fed hike to around 60%. The US dollar strengthened broadly, with the dollar index rising to its highest level in a week.

Warsh emphasized that inflation remains too high, citing both PCE and CPI measures above the Fed's 2% target. He noted that while headline inflation has fallen from its peak, recent progress is modest and that better data are not yet sufficient to confirm an improvement in underlying trends.

The move contributed to a broad-based rally in the US dollar, with the yen weakening through 160 and erasing more than half of its intervention-driven gains. NZD/USD fell towards 0.5910, while the NZD was generally softer on the main crosses.