The Dollar Hits a New High Amid Economic Data
U.S. Retail Sales Data Boosts Dollar
On Wednesday, the dollar reached a fresh one-month high, driven by U.S. retail sales data indicating economic strength. This has led to diminished expectations for immediate rate cuts from the Federal Reserve.
Positive Retail Sales Figures
The Commerce Department’s Census Bureau reported a 0.6% rise in retail sales last month, following a 0.3% gain in November. This exceeded economists’ expectations of a 0.4% increase in retail sales, pointing to growth across various consumer spending categories.
Fed’s Rate Cut Expectations
While the Fed is still seen as likely to reduce rates in March, the likelihood of a 25 basis points cut has dropped to 53.2% from 65.1% on Tuesday, as per CME’s FedWatch Tool.
Market Analyst’s Insights
Karl Schamotta, chief market strategist at Corpay in Toronto, highlighted the underlying inflation pressure remaining steady for a longer period. He also noted policymakers’ efforts to delay the first rate cut and cautioned about the slower pace of future rate cuts.
Dollar’s Performance and Global Market Trends
The dollar index, which tracks the greenback against other major currencies, rose to 103.69, its highest since Dec. 13. The greenback’s performance was also influenced by China’s economic growth and the European Central Bank’s stance on rate cuts.
Global Economic Indicators
China’s economy grew 5.2% in 2023, slightly surpassing the official target, while challenges persist in its recovery. Additionally, the European Central Bank and the Bank of England’s cautious approach to rate cuts also impacted currency values.
Crypto Market Update
In the cryptocurrency market, Bitcoin experienced a 1.9% drop, trading at $42,603.
