The dollar held steady today, Thursday, after the fluctuations it witnessed over the past two days when it recorded a sharp decline, only to recover after that, as traders consider the recent economic data a sign that the Federal Reserve will wait a long time before cutting interest rates.
The green currency rose to 1.08395 against the euro, and to 1.2395 against sterling, while trading stabilized largely against the yen, recording 151.33, after it recovered, yesterday, Wednesday, from its largest decline in a year against its major counterparts.
The dollar index, which measures the US currency against a basket of major currencies, rose 0.14% to 104.47. Yesterday, it rose by 0.31% after falling by 1.51% the previous day.
The dollar received support from retail sales data, which came better than expected, along with more signs of slowing inflation, which reinforces the scenario of a soft landing for the economy, which would give the Federal Reserve time before cutting interest rates.
James Knifeton, chief exchange rate trader at Convera, said that while inflation declines, the economy remains strong, which could allow the Fed to raise rates if it chooses, but Fed officials do not appear inclined to raise rates at the moment.
Traders are still confident that the Fed will not raise interest rates, but they have reduced their expectations for the first rate cut to less than 25%, compared to more than 30% the previous day, according to the CME Fed Watch tool.
While Ben Bennett, investment strategist at ABAC, was more cautious about expectations, as he believes that it is quite possible that data will be released in the coming weeks indicating that the Federal Reserve needs to raise interest rates further, or that growth is declining and a recession has become more likely.
In the same context, the Australian dollar fell by 0.45% to 0.6480 against the US dollar, and the New Zealand dollar fell by 0.62% to 0.59855 against the US currency.
