Markets price a 56% chance of a September Fed rate hike amid hotter inflation expectations and Fed Chair Warsh’s hawkish stance.
The USD strengthened against most major currencies early in the North American session, rising 0.33% against CHF and 0.28% against AUD. The CAD was the sole exception, with USD falling 0.07% against it.
Fed Chair Kevin Warsh signaled openness to a September rate hike if upcoming inflation data exceeds expectations, despite criticism of his communication strategy. Markets currently assign a 56% probability to a hike next month, with US CPI data due next Wednesday.
San Francisco Fed President Mary Daly emphasized caution, supporting steady rates in July while awaiting further data. The Fed’s balancing act between inflation risks and policy adjustments remains in focus.