NEW YORK: The dollar was little changed on Thursday after a round of economic data, while attention began to shift towards a speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium.
Warsh is scheduled to speak at the gathering of central bankers on Friday, where investors will watch for clues on how policymakers plan to navigate a landscape in which higher Treasury yields could do some of the tightening work for them.
The dollar has rebounded somewhat this week from sharp declines in the prior week after US Treasury Secretary Scott Bessent said the Treasury would double the size of quarterly repurchases of longer-dated bonds, sparking concerns that a shift to a more direct strategy to mitigate the rise in borrowing costs could lead to a debasement of the dollar.
The dollar index, which measures the greenback against a basket of currencies, edged up 0.02 percent to 99.14, with the euro up 0.01 percent at USD1.165.
“I’m surprised the dollar’s not a bit stronger actually. The FX market, honestly, is in a bit of a trance,” said Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull in Toronto.
“Warsh is saying the Fed needs to speak less so that the price signals from the bond market are cleaner, and then Bessent wants to distort those signals by intervening, it makes no sense. So that’s why it’s even more important for Warsh to set the record straight tomorrow, because if he doesn’t, the dollar could actually puke.”
The greenback showed little reaction to data from the Labor Department that showed weekly initial jobless claims fell for a second straight week to a seasonally adjusted 203,000, below the 208,000 estimate of economists polled by Reuters, indicating the job market remains on stable footing.
A separate report from the Census Bureau showed the US goods trade deficit widened to USD118.8 billion in July from USD101.4 billion in June, marking the largest goods trade gap since March 2025.
Data on Wednesday showed inflation rose more than expected in July, boosting expectations that interest rates could stay restrictive through the end of this year and briefly lifting expectations for a September rate hike from the Fed to over 40 percent.
But expectations for a hike of at least 25 basis points at the central bank’s next meeting slipped back to 34.1 percent on Thursday, according to CME FedWatch.
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