U.S. Dollar Rises On Fed Kashkari Hawkish Remarks

(RTTNews) - The U.S. dollar strengthened against other major currencies in the Asian session on Thursday, after the hawkish statement by Minneapolis Federal Reserve (Fed) Bank President Neel Kashkari.

While speaking at the Council on Foreign Relations, the Minneapolis Fed President Kashkari stated that inflation is still too high, currently at about 3%, and that this opinion has not changed in light of newly available statistics. This tightening cycle may still involve two more rate hikes, as he anticipates one more this year and another in 2027.

Additionally, Kashkari stated that the longer the economy is strong, the more he doubts the current "degree of tightening" in monetary policy, implying that the neutral interest rate might be higher than previously thought. This suggests that raising the "terminal level" of the policy rate may be necessary, delaying the start of rate reductions.

Later in the day, investors focus on the U.S. ISM Manufacturing Purchasing Managers' Index (PMI) data for September. The U.S. Manufacturing PMI is seen higher at 55.0 from 54.6 in August.

The September preliminary S&P Global PMI data continued to be better than anticipated, highlighting solid private sector activity in the U.S. and raising hawkish Fed predictions. Asian stock markets traded mixed, as crude oil prices rebounded amid lingering uncertainty about U.S. and Iran reaching a deal to end their prolonged conflict anytime soon and reopen the Strait of Hormuz. Efforts by Qatari mediators to broker a diplomatic breakthrough between the U.S. and Iran have made little progress.

Release of data shows that consumer prices in the U.S. rose less than expected in August, with the data reducing the chances the US Fed will raise interest rates later this month. However, concerns remain that persistent energy-driven inflation could prompt tighter monetary policy.

In the Asian trading today, the U.S. dollar rose to nearly a 1-1/2-year high of 0.8368 against the Swiss franc, a 6-day high of 158.35 against the yen and a 2-day high of 1.1315 against the euro, from yesterday's closing quotes of 0.8357, 157.57 and 1.1327, respectively. If the greenback extends its uptrend, it is likely to find resistance around 0.85 against the franc, 160.00 against the yen and 1.12 against the euro.

Against the pound, the greenback edged up to 1.3245 from Wednesday's closing value of 1.3266. The greenback may test resistance around the 1.31 region.

Against Australia, the New Zealand and the Canadian dollars, the greenback advanced to a 2-month high of 0.6940, nearly a 1-year high of 0.5618 and more than a 3-month high of 1.4249 from Wednesday's closing quotes of 0.6946, 0.5634 and 1.4236, respectively. The greenback is likely to find resistance around 0.68 against the aussie, 0.54 against the kiwi and 1.43 against the loonie.

Looking ahead, Eurozone unemployment rate for August is due to be released at 5:00 am ET.

In the New York session, U.S. weekly jobless claims data, U.S. and Canada S&P Global manufacturing PMI reports for September and U.S. construction spending for August are slated for release.