Key Takeaways
- The US Dollar Index remained firm near 99.13, close to an eight-day peak, following stronger-than-anticipated US PCE inflation figures
- July’s PCE climbed 3.7% annually, topping the 3.6% consensus and maintaining Federal Reserve tightening expectations
- Fed Funds futures suggest approximately 60% probability of a rate increase next month, with Jackson Hole speeches in focus
- The South Korean won advanced following the Bank of Korea’s 25-basis-point rate increase to 3.00%
- Bitcoin climbed 0.55% to $78,874 while Ether advanced 1.07% to $2,498 in Thursday’s trading
The greenback maintained its position near an eight-day peak on Thursday following inflation figures that surpassed market expectations, maintaining upward pressure on currencies as market participants await the Jackson Hole economic symposium.
The US Dollar Index was hovering around 99.13, marking its strongest performance since August 19. The index advanced 0.3% in the prior session after Personal Consumption Expenditures figures were released.
PCE Figures Exceed Market Consensus
The PCE price gauge increased 3.7% on an annual basis in July, matching June’s figure but exceeding the market consensus of 3.6%. On a monthly basis, the index advanced 0.2%, likewise stronger than anticipated.
The figures maintained expectations that the Federal Reserve may implement another rate increase. Fed Funds futures were indicating roughly a 60% probability of a hike at the upcoming September meeting, based on CME FedWatch tool data.
Federal Reserve Chair Kevin Warsh is scheduled to deliver remarks at Jackson Hole. Market participants are scrutinizing commentary for indications regarding the timing and magnitude of potential rate adjustments.
The Japanese yen remained relatively unchanged at approximately 159.32 versus the dollar. Bank of Japan Deputy Governor Ryozo Himino indicated that appropriately timed rate increases might prevent an inflation surge but refrained from hinting at a September adjustment.
Futures markets were assigning an 87% likelihood to a BOJ rate hike in the coming month. Market observers highlighted that language in Himino’s remarks resembling that employed prior to the January 2025 increase might represent a meaningful indication.
South Korean Central Bank Delivers Second Consecutive Increase
The South Korean won appreciated after the Bank of Korea lifted its policy rate by 25 basis points to 3.00%, marking its second straight increase. The USD/KRW exchange rate declined 0.3% after the announcement.
The BOK elevated its 2026 economic expansion projection to 3.3% from 2.6% and indicated additional monetary tightening remains on the table though likely at a measured pace. Revised forecasts suggest a year-end rate of 3.25%.
The Australian dollar strengthened 0.2% to $0.718 following domestic price data that renewed speculation of a Reserve Bank of Australia rate hike before year’s end.
The Canadian dollar was little changed at C$1.388 against the greenback. US President Donald Trump remarked it was “time to teach Canada you can’t do this anymore” following the collapse of bilateral trade negotiations.
The euro was quoted at $1.1655 while the British pound remained stable at $1.3592.
In cryptocurrency trading, Bitcoin increased 0.55% to $78,874 and Ether rose 1.07% to $2,498 during the session.
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