HONG KONG: The U.S. dollar held flat near a one-week high against major peers on Friday, as investors stood on the sidelines ahead of Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium for clues on his policy outlook.
The euro and sterling were subdued near one-week lows against the greenback, last at $1.1652 and $1.3597, respectively, though both remained on track for a second straight monthly gain.
The yen was little changed at 159.34 per dollar, having surrendered part of its intervention-driven gains, but it was still headed for a 1.3 per cent monthly rise.
The dollar index, which measures the currency against six major peers, was little changed at 99.13 in early Asian trade.
It has risen 0.3 per cent this week but remains on track for a second straight monthly decline of 0.7 per cent after U.S. Treasury Secretary Scott Bessent said the Treasury would increase buybacks of longer-dated bonds. That has fuelled concerns that efforts to suppress borrowing costs could debase the dollar.
Market participants are now keenly awaiting Warsh’s debut speech in Jackson Hole, Wyoming, for clues on how he would approach monetary policy and tame inflation, although those expectations were tempered by his opposition to providing explicit forward guidance on rates.
Some other Fed officials reiterated on Thursday their ongoing concerns about U.S. inflation and signalled they were open to rate hikes.
“Uncertainty over the Fed’s reaction function and concerns that policymakers may be placing less emphasis on inflation control have increased market focus on Chair Warsh’s Jackson Hole remarks,” Sim Moh Siong, FX strategist at OCBC, said in a note.
For the dollar to weaken meaningfully following the Treasury’s buyback announcement, markets would need evidence that the Fed was prepared to help contain Treasury yields, though this appeared unlikely, he added.
Traders were pricing in roughly 35 per cent odds of a rate hike at the Fed’s September meeting, rising to 75 per cent by December. Treasury yields remain elevated, with those on benchmark U.S. 10-year notes last at 4.676 per cent.
In cryptocurrencies, bitcoin gained 0.5 per cent to $80,620.33, on track for a nearly 30 per cent gain in August that would be its biggest monthly gain since late 2024.
The Australian dollar was up nearly 0.1 per cent to hit a three-month high of $0.72 as rate hike bets built up. The New Zealand dollar climbed 0.2 per cent to $0.5960.
The Canadian dollar held flat at $1.3844 and was heading for a second month of decline after trade tensions with the U.S. escalated further.
Elsewhere, Brent crude futures hovered near $90 a barrel after a Wall Street Journal report suggested President Donald Trump had rejected the idea of re-establishing the terms of the memorandum of understanding the U.S. signed with Iran in June.
