Stronger PCE inflation readings drive dollar index to highest point since mid-August

The US dollar maintained its position near an eight-day high on Thursday, 27 August, after new economic data increased market expectations for a Federal Reserve interest rate hike before the end of 2024. The dollar index, which tracks the currency against a basket of peers, rose 0.21% to 99.13, its strongest level since 19 August. Inflation Data Fuels Rate Hike Bets Data released by the US Commerce Department on Wednesday showed the Personal Consumption Expenditures (PCE) Price Index increased 3.7% year-on-year through July. This figure remained unchanged from June but exceeded economist estimates of 3.6%. On a monthly basis, the PCE rose 0.2%, surpassing the 0.1% forecast and reversing a 0.1% decline recorded in June. The inflation readings have kept the possibility of a year-end rate hike by the Federal Reserve active. Investors are now focused on an upcoming speech at Jackson Hole by Fed Chairman Kevin Warsh, which Westpac economist Ryan Wells described as the "ultimate test" for market direction. Global Currency Movements The dollar traded at 159.23 against the Japanese yen as markets awaited a speech by Bank of Japan Deputy Governor Ryozo Himino. His remarks, scheduled for 01:30 GMT on Thursday, are expected to provide clarity on the potential for a September rate hike in Japan and the future path of monetary tightening. In North America, the Canadian dollar held steady at C$1.388 per US dollar. Tensions remain high following comments from US President Donald Trump,…