FX.co ★ Dollar Weakens on Waller Remarks

The dollar index hovered just below 99 on Friday after a steep drop in the previous session, as traders dialed back expectations for a Federal Reserve rate hike this month following dovish remarks from a Fed official. Governor Christopher Waller said he would support leaving rates unchanged if inflation continues to ease, noting that his next policy decision will hinge largely on August inflation data due next week. Markets now assign roughly a 50% chance to a September rate increase, down from about 63% the day before. Investors are also awaiting Friday’s August jobs report for additional guidance on the Fed’s policy path. The dollar came under further pressure from a surging yen, as traders monitored potential intervention risks and weighed the likelihood of more aggressive policy tightening by the Bank of Japan this year. For the week, the dollar index is on track for a decline of about 0.7%.