Mar 14 2024 In European trading on Thursday, the U.S. dollar saw a slight uptick, maintaining its recent robustness as investors awaited further indications on U.S. interest rates through the upcoming producer inflation and retail sales data releases.
At 06:00 ET (10:00 GMT), the Dollar Index, which gauges the dollar against a basket of six other currencies, edged 0.1% higher to 102.490.
The dollar gained momentum earlier in the week following the release of a stronger-than-anticipated U.S. consumer price index report, bolstering expectations that the Federal Reserve would proceed cautiously in adjusting interest rates.
Although the U.S. currency has faced a decline of approximately 1.7% over the past month, sentiments shifted last week due to dovish remarks from Fed chief Jerome Powell during his congressional testimony, suggesting potential rate cuts by the U.S. central bank in the summer.
Nevertheless, the dollar remains up by roughly 1.5% this year, supported by robust U.S. economic data. Investors now await the release of the February producer price index and retail sales figures to gain further insight into the Fed’s potential policy moves ahead of next week’s meeting.
Analysts at ING highlighted the significance of the PPI release, stating, “PPI will be watched very closely as investors seek confirmation that inflation is not as hot as the CPI report suggested.”
Meanwhile, in the eurozone, EUR/USD experienced a marginal decline to 1.0942 amid limited economic data, contributing to subdued market volatility.
Traders are eyeing potential interest rate cuts by the European Central Bank (ECB) in response to sluggish growth, particularly in Germany. ECB policymaker Francois Villeroy de Galhau hinted at a likely rate cut in spring, while ECB chief Christine Lagarde indicated June as a more plausible timeframe.
GBP/USD traded higher at 1.2816, with expectations of the Bank of England maintaining its current interest rates given inflation levels above the central bank’s medium-term target.
In Asia, USD/JPY edged higher to 147.82 ahead of the Bank of Japan’s meeting next week, amid speculations of potential adjustments to its ultra-easy monetary policy.
USD/CNY saw a modest increase to 7.1902 amidst concerns over China’s economic recovery, while AUD/USD rose to 0.6624, supported by robust commodity prices propelling the Australian dollar to near two-month highs.
