The US dollar edged higher against major currencies from August 26 to 28 as investors awaited Federal Reserve chair Kevin Warsh’s speech at the Jackson Hole symposium, expected on August 28-29 [1, 2, 3, 4]. Supported by resilient US inflation data showing core PCE inflation between 3.3% and 3.7% year on year—well above the Fed's 2% target—the dollar index recovered to a range of 99.16 to 99.18 by August 27-28 [3, 4, 5]. Elias Haddad of Brown Brothers Harriman said, "The big support for the dollar here is that the US economy continues to outpace that of other major economies." [3]
Meanwhile, the US Treasury intervened through buybacks to limit long-term bond yield rises, adding volatility to the markets [1, 2, 3]. Analysts widely expect the Fed to hold rates steady in September but assign about a 74% chance of hikes by December, factoring in inflation trends and geopolitical tensions in the Middle East [3, 4]. Chris Turner of ING noted, "We’re generally slightly bearish on the dollar into the year-end because we don’t think the Fed is going to hike in September or at all." [4]
In Asia, the Australian dollar rose to a three-month high of US$0.71865 on August 26 after trimmed mean CPI inflation data showed a 3.6% annual increase, raising expectations of further interest rate hikes by the Reserve Bank of Australia [1, 2]. Capital Economics analysts said, "With underlying inflation showing no signs of slowing, there’s still a risk that the RBA will deliver another rate hike over the coming months." [1]
The Malaysian ringgit strengthened against the US dollar over August 26-28, buoyed by softer US Treasury yields and cautious optimism ahead of the Fed speech at Jackson Hole [6, 7, 5, 8]. Bank Muamalat Malaysia chief economist Dr Mohd Afzanizam Abdul Rashid said, "The ringgit appreciated against the US dollar today as the prospect of an interest rate hike by the Fed in September looked fairly low." [7] Despite mixed performance against other regional currencies, the ringgit showed modest gains against the yen, euro, and British pound during the period [6, 7, 5, 8].
Bursa Malaysia's benchmark KLCI index rose steadily from 1,748.54 points on August 26 to 1,752.20 points on August 27, supported by banking and YTL-related counters amid cautious sentiment driven by earnings season and geopolitical risks [9, 10, 11]. On August 27, optimism ahead of Malaysia’s National Day helped lift the index, with banking sector earnings expectations providing additional support [11].
Market participants remain focused on Fed chair Kevin Warsh’s Jackson Hole address tomorrow, seeking guidance on the monetary policy outlook and inflation trajectory [1, 2, 3, 4, 6, 7, 12, 8]. Dr Rashid added, "Traders would scrutinise US Fed chair Kevin Warsh’s speech at the Jackson Hole Symposium tomorrow for clues on the Fed’s possible decision at the upcoming FOMC meeting on Sept 15-16." [12]
