US Dollar Index holds positive ground near 98.50 ahead of US PMI data

• US Dollar Index attracts some buyers to near 98.40 in Thursday's early European session. 
• Rates futures traders are pricing in an 80% probability of a quarter-point cut in the September meeting. 
• Fed officials acknowledged worries over higher inflation and weaker employment, according to the FOMC minutes.

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, gains traction to around 98.40 during the early European session on Thursday. Traders brace for the preliminary reading of the US S&P Global Purchasing Managers Index (PMI) for August later on Thursday, ahead of the Federal Reserve's (Fed) annual Jackson Hole symposium. 

The DXY hovers around a one-week high as traders reduce bets on a rate cut at the Fed's September meeting after hotter-than-expected July Producer Price Index (PPI) data. Traders are currently pricing in nearly an 80% chance for a quarter-point Fed rate cut on September 17 and price in a total of 52 basis points (bps) of reductions over the rest of the year, according to the CME FedWatch tool. On Wednesday, the chance for a cut next month stood at 83%.

The minutes from the Fed's July 29-30 meeting showed that policymakers remain more concerned about inflation risks than the labor market, with tariffs deepening divisions within the committee. The US central bank left interest rates unchanged in a range of 4.25% to 4.5% last month, citing elevated uncertainty in its outlook. 

Fed Governors Christopher Waller and Michelle Bowman dissented from the majority opinion, arguing for a 25 basis points (bps) rate cut. That is the first time since 1993 that two members of the Board of Governors have broken ranks with the committee. 

Fed Chair Jerome Powell will deliver a closely watched speech in Jackson Hole, Wyoming, later on Friday. His remarks in recent months have leaned to the hawkish side, but those were all before the release of the weak July employment report. Any surprise dovish comments from Powell could undermine the US Dollar against its rivals in the near term.