The dollar rose sharply after the Fed chair hinted at a possible rate hike
Kyiv • UNN
The dollar rose by 0.59% after Kevin Warsh hinted at a possible rate hike. The probability of a September hike reached 57.5%.
The U.S. dollar posted its biggest daily gain in 2.5 months after Federal Reserve Chair Kevin Warsh said interest rates might need to be raised. Reuters reports, as cited by UNN.
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During his first speech at the central bankers’ symposium in Jackson Hole, Warsh said the Fed "would have work to do" if inflation did not continue moving toward the 2% target.
Markets interpreted his remarks as a signal of a possible tightening of monetary policy. According to CME FedWatch, the probability of at least a 25-basis-point rate hike at the Fed’s September meeting rose from approximately 35% to 57.5% after Warsh’s speech.
The dollar is on track for its best week in 10 weeks
The dollar index, which measures the currency against a basket of major currencies, rose 0.59%—its biggest daily jump since June 17. The index reached 99.69 and climbed as high as 99.727 during trading, its highest level since August 17.
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Over the week, the U.S. currency gained nearly 0.9% and is heading for its biggest weekly increase in the past 10 weeks. Meanwhile, the euro fell 0.59% to $1.1582, losing about 0.8% over the week.
The dollar also strengthened 0.48% against the Japanese yen, to 160.15 yen per dollar. The British pound fell 0.47% to $1.3528, while the Canadian dollar weakened 0.37%.
Warsh’s comments came after several Fed officials expressed concern over inflation, which continues to exceed the U.S. central bank’s target.