Soft US Dollar Faces Dovish Test at Jackson Hole
The US Dollar Index (DXY) ended last week near even with Thursday's close, holding around 98.80.
This softness owes less to recent data than to a fundamental shift: the US Treasury's move to at least double its buybacks of longer-dated debt has pulled yields lower and reduced demand for the Greenback.
The Dollar's decline is not due solely to economic indicators, but rather to the impact of these monetary policy changes.
This week will be dominated by a few key events: on Wednesday, the Federal Reserve will release its July Personal Consumption Expenditures (PCE) Price Index, followed by new Fed Chair Kevin Warsh's first Jackson Hole keynote and the US Bureau of Labor Statistics' preliminary annual benchmark revision to Nonfarm Payrolls on Friday.
If Warsh expresses dovish sentiments or if there is a heavy downward revision to the jobs numbers, it could further erode the Dollar's value.