- The US Dollar Index gained from Powell’s speech at the Jackson Hole Symposium.
- Odds of a Fed rate cut shifted following US purchasing manager index and unemployment claims data.
- Cleveland Fed President Hammack noted there are no current cases for cutting interest rates.
The US Dollar Index (DXY), which tracks the dollar’s value against six major currencies, continued its upward trend during Asian trading hours on Friday, hovering around 98.80. Market participants are keenly awaiting remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium, hoping for insights into the policy direction for September.
The strength of the dollar is largely linked to lowered expectations for Fed intervention in September, buoyed by a robust purchasing manager index (PMI) and positive economic data from the US. According to the CME FedWatch tool, traders shifted their outlook, reducing the probability of an interest rate cut from 82% mid-week to 75% as of now.
The preliminary S&P Global US Composite PMI for August increased to 55.4, up from 55.1. Meanwhile, the US manufacturing PMI surged from 49.8 to 53.3, exceeding the market expectation of 49.5. Although the service PMI dipped slightly from 55.7 to 55.4, it still outperformed the anticipated figure of 54.2. Additionally, first-time unemployment claims rose to 235K last week, surpassing the consensus estimate of 225K for the eighth consecutive week, indicating some softening in labor market conditions.
“I’m approaching every meeting with enthusiasm,” said Cleveland Fed President Beth Hammack during an interview with Yahoo Finance on Thursday. However, with the current data, she mentioned that if the meeting were tomorrow, she wouldn’t identify any cases for a rate cut, as reported by Reuters.
On the other hand, Chicago Fed President Austan Goolsbee remarked that the September meeting is still open to actions. He noted that the Federal Reserve is receiving mixed signals regarding the economy. Boston Fed President Susan Collins also indicated a potential openness to rate cuts in September, citing challenges and possible softness in the labor market.
