US Dollar: Warsh speech risks asymmetric USD reaction – Commerzbank
Commerzbank’s Volkmar Baur notes the US Dollar has stabilized after last week’s setback, with Kevin Warsh’s Jackson Hole speech seen as the next key test.
Commerzbank's Volkmar Baur notes that the US Dollar has stabilized after last week's decline, with Kevin Warsh's Jackson Hole speech acting as the next key test. Baur expects minimal forward guidance on a September rate hike; however, he highlights the possibility of the Fed discussing changing the inflation measure from the PCE deflator to a different one, which could be seen as dovish for the Dollar.
The upcoming speech will focus on two key aspects: clarity around a potential interest rate hike in September and whether there might be a hint of changing the Fed's inflation target. A hint towards a different measure of inflation could pressure the US Dollar, while Warsh reiterating the non-negotiable nature of the Fed's 2% target would likely provide support for the currency.
The article emphasizes the significance of Warsh's speech in shaping market expectations and the potential impact on the US Dollar.
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