The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining stronger for the second successive day and trading around 99.20 during the European hours on Thursday.
The Greenback draws firm support following the release of robust US economic data
July’s US PCE price index accelerated to 0.2% month-on-month, edging past the 0.1% consensus estimate, while the annual rate held at 3.7%, defying expectations of a slowdown to 3.6%. This unexpected uptick in inflation has reinforced market bets that the Federal Reserve (Fed) could deliver one final rate hike before the end of the year, leaving investors closely watching for policy cues during Fed Chair Kevin Warsh’s upcoming address at the Jackson Hole symposium. Dollar shorts capped as markets eye Kevin Warsh’s Jackson Hole remarks Strategists at ING highlight that “tomorrow’s speech at Jackson Hole by Kevin Warsh remains a potentially pivotal event for FX,” cautioning that markets may therefore be “reluctant to build excessive USD shorts today.” They add that, even with “some upbeat risk sentiment after strong Nvidia results,” the Dollar index “may find support above 99.0 into the speech,” underscoring how event risk around Warsh’s remarks is helping to anchor DXY ahead of the Fed’s next policy decisions.
Broader markets, meanwhile, digested shifting geopolitical developments and rising fiscal scrutiny. Crude oil prices extended their decline after diplomatic progress in the Middle East, where Iran and Oman reached an agreement regarding territorial waters and revenue-sharing along the Strait of Hormuz, helping to temper near-term inflation concerns. Concurrently, attention turned to the US Treasury’s proposal to double its bond buyback program, an initiative that drew sharp criticism from billionaire investor Stanley Druckenmiller, who argued it undermines market credibility and skips a vital chance for meaningful debt reform.