US Federal Reserve (Fed) Chairman Jerome Powell is scheduled to deliver a speech titled "Economic Outlook and Framework Review" at the annual Jackson Hole Economic Symposium on Friday at 14:00 GMT.

Market participants will be closely watching Powell's speech for new clues on the direction of monetary policy, particularly regarding the timing of the Fed's first interest rate cut this year and the potential scope and timing of subsequent rate cuts.

Powell's remarks are expected to roil markets, triggering intense volatility around the US dollar (USD), as the world's most influential central bank plans to take policy easing steps as early as September.

At its July policy meeting, the Fed maintained the federal funds rate in the range of 4.25%-4.50%, but two policymakers dissented. Fed Governor Christopher Waller and Fed Governor Michelle Bowman voted in favor of a 25 basis point (bps) rate cut.

In a statement released a few days after the July meeting, Governor Waller explained that he disagreed because he viewed tariffs as a one-time price event that policymakers should "consider" as long as inflation expectations remained subdued. Governor Bowman argued that slowing growth and a less dynamic labor market made it necessary to gradually shift the already tight policy toward neutral.

However, US employment data for July rekindled concerns about worsening labor market conditions and strengthened expectations of a September interest rate cut.

US nonfarm payrolls (NFP) rose by 73,000 in July, while nonfarm payrolls for May and June were revised down to 125,000 and 133,000, respectively. On the other hand, the latest Consumer Price Index (CPI) and Producer Price Index (PPI) data from the US indicate persistently high inflation, raising doubts about the number of interest rate cuts the Fed might choose in 2025.

Against this backdrop, the US Dollar (USD) faces two-way risks ahead of the highly anticipated Jackson Hole summit. (alg)

Source: FXstreet