Dollar steadies near one-month high; Sterling gains on hot inflation data
Investing.com — The U.S. dollar steadied at a one-month high amid increasing doubts over early interest rate cuts by the Federal Reserve, while sterling climbed on hot inflation data.
At 04:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 103.247, just below the 103.55 level seen earlier Wednesday, its highest level since Dec. 13.
The greenback received a boost late Tuesday after Federal Reserve Governor Christopher Waller said that while interest rate cuts were likely to happen this year, the central bank was not considering any in the near-term, citing continued resilience in the U.S. economy.
Uncertainty over when the Fed will start cutting interest rates has helped the dollar rebound this year after being hard hit at the end of 2023 in the wake of the Fed's dovish turn at the December FOMC meeting.
Market expectations of a rate cut in March have eased to a 62.2% chance versus an 76.9% view in the prior session, according to CME's FedWatch Tool.
U.S. retail sales are due for release later Wednesday, and will be closely watched for indications that consumer spending — a major driver of economic growth — is remaining resilient in the face of elevated interest rates.
In Europe, GBP/USD rose 0.2% to 1.2657 after U.K. consumer price inflation rose for the first time in 10 months in December, increasing to 4.0% on an annual basis from a more-than-two-year low 3.9% in November.
This resulted in traders pared back expectations for Bank of England interest rate cuts over the coming months, with inflation proving to be more sticky than previously anticipated.
EUR/USD dropped 0.1% to 1.0868, near a one-month low despite hawkish comments from a number
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