US Dollar May Rise if Fed Minutes and Jackson Hole Spook Markets

US DOLLAR FUNDAMENTAL FORECAST: BULLISH

• US Dollar may gain on Fed meeting minutes, Jackson Hole symposium

• Commentary and outlook may spook markets, boost demand for liquidity

• Are investors once again overly optimistic on prospect of Fed rate cuts？

The US Dollar may rise next week if the publication of Fed meeting minutes along with commentary from the Jackson Hole symposium spook markets and drive demand for liquidity. The anti-risk Greenback may also capitalize on market-wide premonitions of an incoming recession as bond yields dive into negative territory and equities continue to show greater fragility against the backdrop of unstable geopolitics.

The headline risk will likely be the publication of Fed meeting minutes. Despite the most recent FOMC decision to cut rates by 25 basis points, the US Dollar emerged triumphant at the expense of equity markets. This is because Fed Chairman Jerome Powells commentary was less dovish than what markets had anticipated, which led to the fear that there may not be an abundance of rate cuts down the line.

US Dollar Continues to Climb Despite Mounting Fed Rate Cut Expectations

US Dollar charted created using TradingView

It is likely that the Fed meeting minutes will provide a more nuanced view of this and may cause investors to flock to the US Dollar. Strength in the Greenback may also be amplified by the Jackson Hole symposium if the outlook from officials spooks markets and drives demand for anti-risk assets. In times of uncertainty, a premium is placed on liquidity, and in this regard, the US Dollar reigns supreme.

S&P 500 chart created using TradingView

US DOLLAR TRADING RESOURCES