Markets Watch Warsh Jackson Hole as Fed Signals Split

Markets are braced for signals from Fed Chair Kevin Warsh at Jackson Hole, with mixed policy signals and lingering inflation concerns keeping swings in FX and rates. The Australian dollar rises for a fourth straight day on hawkish inflation data and a reassuring RBA bulletin that keeps the door open for another hike, even as US data keeps the dollar bid on hawkish bets. EUR/USD fluctuates near 1.165 as traders weigh a possible September rate hike amid a clear split among Fed officials on the right path for policy. Officials including Schmid, Hammack, and Goolsbee warn that inflation remains sticky and could necessitate tighter policy, even as some dissenters questioned the adequacy of current rates. The July PCE price index shows inflation at 3.7% year over year with core at 3.3%, while real spending stagnates, illustrating only tentative progress toward the 2% target. Overall, investors expect the outcome of Jackson Hole to tilt expectations for late-2026 policy moves and influence the USD and risk sentiment, depending on the tone of Warsh’s speech and accompanying commentary.