Dollar near eight-day high as US data lifts Fed hike bets

The U.S. dollar reached a near eight-day high on Thursday, buoyed by mixed U.S. economic data that raised hopes of a Federal Reserve interest rate hike, according to wire reports. Prior to the Jackson Hole central bankers symposium, traders and analysts are closely watching key speeches by Bank of Japan officials for insights into potential September rate hikes and the scope of future tightening.

The Commerce Department's latest data revealed that the Personal Consumption Expenditures Price Index rose 3.7% over the past year in July, in line with expectations but slightly higher than the 3.6% forecast. On a month-to-month basis, the PCE index increased by 0.2%, surpassing the 0.1% estimate. Despite this positive inflation signal, a speech by Bank of Japan deputy governor Ryozo Himino will be a critical factor for market expectations, especially if it hints at a favorable outlook for a rate increase at the upcoming September meeting.

Westpac economist Ryan Wells noted that Chairman Kevin Warsh's upcoming remarks at the Jackson Hole symposium will be the decisive test for Fed policy expectations. Meanwhile, the dollar index climbed 0.21% to 99.13, its highest level since August 19, while the greenback slipped against the yen to 159.23. U.S. President Donald Trump voiced his dissatisfaction with Canada's recent trade talks, while major currencies held steady against the dollar, with the Australian dollar slightly gaining against the greenback. Bitcoin and Ether also saw modest gains in the cryptocurrency market.