Dollar Could Slide if Markets Aren't Convinced by Warsh on Inflation

Dow Jones
08/28

0629 GMT - Fed Chair Warsh's address at Jackson Hole will try to achieve four main objectives, says Samarra Hammoud, FX strategist at CBA. These are: restore confidence in the Fed's commitment to containing inflation, ease concerns around fiscal dominance, convince markets that less reliance on forward guidance won't undermine stability, and build confidence in the Fed's taskforces, she says.These are ambitious goals and markets should be skeptical that communication alone will be enough to achieve them, Hammoud adds. Given Warsh's aversion to forward guidance, there is a risk markets judge his comments as insufficiently forceful on inflation. In that scenario, the dollar can fall, she says.

 

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