Dollar Rises After Sharp Drop

The dollar index climbed toward 98 on Monday, recovering part of its losses from the previous session as investors continued to assess the outlook for Federal Reserve policy.

On Friday, the index fell nearly 1% after Fed Chair Jerome Powell signaled in his Jackson Hole speech that rate cuts could be on the horizon.

Powell emphasized that while unemployment remains low, risks to the labor market are building and monetary policy is still “restrictive,” indicating that adjustments may be warranted.

He also pointed to changes in tax, trade, and immigration policies as key factors reshaping the economic landscape.

Markets are now pricing in an 87% probability of a 25 basis point rate cut in September, up from about 75% at some point last week.

Attention will turn to Friday’s release of the July personal consumption expenditures price index, the Fed’s preferred inflation measure, for further policy signals.