Dollar hits fresh one month high after retail sales data
By Chuck Mikolajczak
NEW YORK (Reuters) -The dollar index hit a fresh one-month high on Wednesday after U.S. retail sales data indicated the economy remained on solid footing, denting the market outlook for any potential rate cuts from the Federal Reserve.
Retail sales rose 0.6% last month after an unrevised 0.3% gain in November, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales gaining 0.4%.
While markets still see the Fed's first downward move in rates likely to come in March, expectations for a cut of at least 25 basis points (bps) are down to 57.1%, according to CME's FedWatch Tool, from 65.1% on Tuesday.
«If we look at this morning's retail sales report, that points to growth on virtually every possible level and across every aggregate within the consumer spending sphere,» said Karl Schamotta, chief market strategist at Corpay in Toronto.
«That points to underlying inflation pressure remaining sticky for longer, and that coincides with the fact that we're seeing a concerted push from policymakers to anchor market expectations out into the middle of the year for the first cut, and also to warn markets that the cadence of rate cuts is going to be slower than anticipated.»
The dollar index which tracks the greenback against a basket of currencies of other major trading partners, was up 0.21% at 103.51, after climbing to 103.68, its highest since Dec. 13.
The greenback jumped 0.67% jump on Tuesday, it's biggest one-day percentage climb since Jan. 3, driven higher in part by comments from Fed Governor Christopher Waller, who said that, while the U.S. was «within striking distance» of the Fed's 2% inflation goal, the central bank should not rush towards cuts in its
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