Dollar holds near one-month peak as dovish Fed bets recede
dollar held close to a one-month peak versus major peers on Thursday after robust U.S. retail sales data overnight added to building expectations the Federal Reserve will not rush to lower interest rates.
Australia's dollar weakened after data showed an unexpected decline in employment.
The U.S.
dollar index, which measures the currency against a basket of six rivals, traded little changed at 103.36 in the Asian morning, after reaching 103.69 on Wednesday for the first time since Dec. 13.
The yen was a notable underperformer, as it tends to move in the opposite direction of U.S.
long-term yields, which also touched a one-month high overnight as dovish Fed bets receded. At the same time, investors steadily priced out hawkish Bank of Japan wagers, not least due to the devastating New Year's Day quake in central Japan.
The BOJ meets on policy on Monday and Tuesday of next week.
Traders have trimmed the odds of a first Fed rate cut by March to 53.8%, down from 63.1% on Tuesday, according to CME's FedWatch Tool.
The market is still pricing in a likely 150 basis points of cuts by the end of the year, even as Fed officials including Governor Christopher Waller this week pushed back against expectations of rapid policy loosening.
Interest rate pricing «appears overly optimistic given the latest retail sales report shows the U.S.
