TOKYO, August 27 — The US dollar held near an eight-day high on Thursday following the release of US inflation and economic data that slightly increased expectations of a Federal Reserve rate hike. This comes ahead of the Jackson Hole central bankers' symposium scheduled to begin later in the day.

Data from the US Commerce Department showed that the Personal Consumption Expenditures (PCE) Price Index rose 3.7% over the 12 months through July, unchanged from June and slightly above the 3.6% estimate by economists polled by Reuters. On a month-on-month basis, the PCE increased by 0.2%, surpassing the 0.1% forecast after a 0.1% decline in June.

The inflation reading has kept market expectations for a Fed rate hike by year-end alive. However, Westpac economist Ryan Wells noted that Chairman Kevin Warsh's upcoming speech at Jackson Hole "will be the ultimate test."

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.21% to 99.13, its highest level since August 19. Against the yen, the dollar traded at 159.23, having given back most of its intervention gains but remaining well above a multi-decade low near 164.

Markets are also focused on a speech and press conference by Ryozo Himino, one of the Bank of Japan's two deputy governors, for indications on a possible September rate hike and the extent of future monetary tightening. Mitsubishi UFJ Bank senior analyst Akihiko Yokoo recalled that in a speech shortly before the January 2025 rate hike, Himino said policymakers would "discuss and decide whether to raise interest rates." If similar wording is used this time, it could signal a strong possibility of a rate hike at the September meeting. Money markets currently price in an 87% chance of a rate hike by the Bank of Japan next month.

Separately, President Donald Trump stated on Wednesday that it was "time to teach Canada you can't do this anymore," following the breakdown of trade talks between the neighboring countries.

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