Dollar holds gains as investors await Warsh’s Jackson Hole debut

The US dollar held steady near a one-week high against major currencies on Friday, as investors waited to see how Federal Reserve chair Kevin Warsh would present his policy outlook at the Jackson Hole symposium. The euro and British pound slipped near one-week lows against the greenback, but both were still on track for a second straight monthly gain.

The Japanese yen remained relatively stable at 159.34 per dollar, following a period of intervention-driven gains. The dollar index, which tracks the currency against six major peers, held steady at 99.13 in early Asian trade, up 0.3% this week but on track for a second monthly decline of 0.7% after Treasury Secretary Scott Bessent announced increased bond buybacks to curb borrowing costs.

This move has raised concerns that efforts to suppress interest rates could weaken the dollar. Market participants are eagerly anticipating Warsh's debut speech at Jackson Hole, Wyoming, in hopes of gaining insight into his monetary policy approach and efforts to combat inflation. However, some Fed officials have reiterated recent concerns about inflation and suggested they are open to raising interest rates.

Market focus is now shifting to Warsh's remarks, as uncertainty surrounding the Fed's reaction and potential changes in policy stance increase. Analysts estimate there is a 35% chance of a rate hike during the Fed's September meeting, with odds rising to 75% by December. Despite elevated Treasury yields, currently at 4.676% on 10-year notes, the dollar did not weaken significantly following the Treasury's buyback announcement, as traders believe a rate hike is unlikely.

In the cryptocurrency market, Bitcoin gained 0.5% to $80,620.33, on track for a nearly 30% monthly gain that would be its biggest since late 2024. Meanwhile, the Australian dollar rose nearly 0.1% to a three-month high of $0.72, driven by optimism around potential rate hikes. The New Zealand dollar also climbed 0.2% to $0.5960. In contrast, the Canadian dollar remained flat at $1.3844, heading for a second month of decline amid escalating trade tensions with the US.

Oil prices, measured by Brent crude futures, hovered near $90 a barrel after a Wall Street Journal report suggested President Donald Trump rejected the possibility of reviving the terms of the U.S.-Iran memorandum of understanding signed in June.