Dollar edges lower, but remains supported by economic resilience
Investing.com — The U.S. dollar slipped lower during early European trading Thursday, but remained near a one-month high after robust U.S. retail sales data spurred more doubts over early rate cuts by the Federal Reserve.
At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.107, after reaching 103.69 on Wednesday for the first time since Dec. 13.
The dollar received a boost overnight after U.S. retail sales came in stronger than expected, providing support for recent comments from a number of Fed officials that the central bank will keep rates higher for longer.
There is more U.S. data to digest Thursday, including weekly jobless claims, building permits and housing starts for December, as well as the Philly Fed manufacturing index for January.
U.S. economic activity has tended to surprise with its resilience, providing another reason for policymakers to move slowly.
Data from the U.K., released on Wednesday, showed that the annual inflation rate sped up for the first time in 10 months in December. The next U.S. CPI release is scheduled for Feb. 13.
“Investors will probably want to wait for this release before, for example, looking to rebuild short dollar and long risk positions,” said analysts at ING, in a note.
In Europe, GBP/USD rose 0.1% to 1.2685, continuing Wednesday’s rally after data showed inflation unexpectedly accelerated in December, reinforcing expectations the Bank of England will be slower to cut rates than its peers.
“The inflation data also helped GBP/USD hold support at 1.2600 yesterday and 1.26-1.28 looks a likely near-term range until the broader dollar trend resolves itself,” ING added.
EUR/USD traded largely
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