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Dollar Strengthens on Bets of Fed Rate Hike After Inflation Beats Expectations
MacroDigital Finance
The U.S. dollar strengthened against major currencies in trading at the New York foreign exchange market on Wednesday (Aug. 26) after the U.S. reported higher-than-expected inflation data, which could support a rate hike by the Federal Reserve. Meanwhile, investors are watching for a speech by Fed Chair Kevin Warsh at the Jackson Hole symposium on Friday. The dollar index rose 0.25% to 99.165. The dollar strengthened against the yen to 159.40 yen from 159.22 yen, and firmed against the Swiss franc to 0.8055 francs from 0.8020 francs. The euro weakened to $1.1651 from $1.1674, and the pound fell to $1.3592 from $1.3646. The U.S. Commerce Department reported that the personal consumption expenditures (PCE) price index rose 3.7% in July year-on-year, higher than the 3.6% forecast by analysts. Core PCE, which excludes food and energy, rose 3.3%, in line with expectations. The latest inflation figures have raised investor concerns that the Fed may raise interest rates. The CME Group's FedWatch Tool indicated that investors assign a 40% probability of a rate hike at the September meeting, compared with 36% before the PCE release. Investors are also awaiting Fed Chair Kevin Warsh's speech at the annual Jackson Hole symposium on Friday, Aug. 28, at 10:00 a.m. U.S. time, or 9:00 p.m. Thai time. Additionally, the Commerce Department released its second estimate for second-quarter GDP, showing growth of 1.5%, unchanged from the initial estimate, and durable goods orders rose 1.1% in July, beating the 0.4% forecast.