Dollar Surges on Warsh's Hawkish Comments, Rate Hike Now Seen More Likely

The US dollar strengthened against major currencies on Friday after Federal Reserve Governor Kevin Warsh signaled a more hawkish stance on monetary policy at the Jackson Hole symposium.

Warsh emphasized the need for continued vigilance against inflation, suggesting that interest rates may need to remain higher for longer than markets currently anticipate.

The dollar index rose 0.2% to 104.30, bringing its weekly gain to nearly 1%, as traders adjusted their rate expectations in response to Warsh's comments.

The euro fell 0.3% against the dollar to $1.0825, while the British pound slipped 0.2% to $1.2650.

Emerging market currencies also felt the impact, with the MSCI emerging market currency index down 0.4% on the day.