The dollar index (DXY00) rallied to a 2-week high on Friday and finished up by +0.61%. The dollar jumped on Friday on hawkish comments from Fed Chair Warsh, who warned inflation isn’t meaningfully slowing and vowed that policymakers will return inflation to their 2% target. The chance of a Fed rate hike at next month’s FOMC meeting rose to 57% from 36% before Warsh’s speech. Friday’s unexpected upward revision in the University of Michigan US Aug consumer sentiment index also supported the dollar.
Limiting gains in the dollar was the unexpected downward revision to US 2026 nonfarm payrolls, signaling the labor market was weaker than previously stated, a dovish factor for Fed policy. Also, the unexpected contraction in the Aug MNI Chicago PMI is negative for the dollar.
