The USD is steadying after Wednesday’s reversal off the highs against the majors. The news flow is light, however, and the USD rebound evident so far today may simply reflect markets refusing to overly commit on positioning ahead of Powell’s Jackson Hole comments on Friday.

Markets are barely priced for anything more than 5.50% at the moment, let alone 6%. This perhaps gives us some sense of what the USD needs from Chairman Powell’s comments to remain better supported. Firstly, USD bulls will want to hear that September’s FOMC is ‘live’ (or perhaps get a strong hint that pricing needs to shift more towards a hike) and secondly, that rates are liable to remain restrictive for an extended period. Without some hawkish messaging lifting rates and boosting spreads, the USD may struggle to gain more ground for now.