The US dollar held broadly steady as investors positioned cautiously ahead of the Federal Reserve's July meeting minutes and Chair Jerome Powell's Jackson Hole remarks. Traders remained sensitive after a weak payrolls report and mixed inflation data complicated the near-term policy outlook. The July meeting saw two dissenting votes from Christopher Waller and Michelle Bowman favoring a quarter-point cut rather than holding rates, highlighting Fed divisions. Markets price an 83% chance of a September rate cut with expectations of additional easing later in the year, though traders note risks from Powell taking a more hawkish tone. Treasury yields were stable, with the 10-year near 4.3%.
The US dollar held broadly steady on Wednesday as investors positioned cautiously ahead of the Federal Reserve's July meeting minutes and Chair Jerome Powell's remarks at the Jackson Hole symposium later this week. Traders could remain sensitive after a weak payrolls report and mixed inflation data complicated the near-term policy outlook. In addition, the July meeting featured two dissenting votes, with Christopher Waller and Michelle Bowman pushing for a quarter-point cut instead of leaving rates unchanged.
Expectations now point to an 83% likelihood for a September rate cut, with investors also positioning for an additional cut after that this year. Traders, however, remain wary that Powell could strike a more hawkish tone, emphasizing tariff-driven inflation risks and pushing back against the degree of easing expected by the market. Last week's hotter-than-expected producer price index data added to the uncertainty, adding to the risks.
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