Dollar firms as traders pare rate cut bets ahead | Money News

By Jaspreet Kalra and Ankur Banerjee

SINGAPORE (Reuters) -The U.S. greenback hovered close to a two-week high in opposition to the euro and sterling on Friday as traders trimmed rate cut wagers ahead of an eagerly anticipated speech from Federal Reserve Chair Jerome Powell on the Jackson Hole symposium.

The euro and sterling touched their weakest ranges since early August and had been final down 0.1% every at $1.1597 and $1.34080, respectively.

While indications of weak spot within the U.S. labour market had bolstered hopes of an discount in borrowing prices subsequent month, expectations have been tempered since by financial knowledge flashing inflationary dangers and cautious feedback from Fed policymakers.

Traders are presently pricing in a 73% probability of a 25-basis-point rate cut in September, down from 85.4% a week earlier, CME’s FedWatch device confirmed.

“The dollar has been reflecting the risk that he (Powell) could stick to his guns and become more cautious,” mentioned Jane Foley, head of FX strategy at Rabobank.

The greenback index, which measures the U.S. currency in opposition to six rivals, was up 0.1% at 98.71, heading in the right direction for a 0.9% rise within the week, snapping its two-week shedding streak.

Fed officers appeared lukewarm on Thursday to the thought of a rate cut subsequent month, setting the stage for Powell’s speech scheduled for 10 a.m. EDT (1400 GMT) on the annual Jackson Hole convention in Wyoming, which kicked off on Thursday.

Chicago Fed president Austan Goolsbee acknowledged the upcoming assembly is “live” and will carry a change in curiosity rate coverage, though he famous combined financial knowledge and up to date unexpectedly high inflation knowledge gave him pause in regards to the prospect of an imminent easing in rates of interest.

“With another inflation and payrolls print still due before the September meeting, Powell has every reason to stay patient and keep optionality open,” mentioned Charu Chanana, chief investment strategist at Saxo.

Analysts at BofA Global Research noticed modest near-term upside potential for the greenback going into the Jackson Hole symposium however continued to carry an total bearish outlook amid rising stagflation dangers for the U.S. economic system.

“The stagflationary environment, tariffs, and worries on Fed independence and US institutions should ultimately push down USD,” the analysts mentioned in a word, raising their year-end euro forecast to $1.20, from up $1.17 earlier.

The single currency is up 12% over 2025 to this point, benefiting from the greenback’s decline.

Elsewhere, the yen eased to 148.56 per greenback, and was poised for a 0.9% decline for the week.