The dollar fell as investors grabbed riskier currencies after strong US economic data boosted confidence in the outlook for global growth, even as the Federal Reserve raised interest rates further.
Reports from the US Commerce Department showed that US retail sales rebounded sharply, driven by big-ticket purchases such as cars and other goods.
This came just a day after US inflation figures showed that consumer prices slowed. Figures last month showed that US job growth was accelerating, which meant the economy was strong.
However, the question for market watchers is how well the economy can hold up, especially since rates are much higher than many initially assumed.
The US dollar index fell 0.14% to 103.74 after hitting a six-week high of 104.12 the previous day.
Even since the beginning of the month, US monetary policy expectations have changed a lot. On February 1, the market peaked at 4.84% for July, and by the end of the year, it had decreased to 4.52%.
Evidence of economic strength weakened the dollar on Thursday, but it lifted stocks and manufacturing.
Currencies
Against the dollar, the euro rose 0.24% to $1.07096, hitting a six-week low earlier. That said, it’s still 12% above its 20-year low at the end of September.
Sterling rose 0.13% to $1.20466 after losing more than 1.4%.
British inflation decreased more than expected in January. The BoE may not raise rates in March. Wednesday’s inflation data confirmed this view.
At the same time, the yen rallied broadly. The dollar was down 0.23% to 133.92 and the euro was down by 0.12% to 143.4. Yen traders are waiting for the next Bank of Japan governor, Kazuo Ueda, to speak at a confirmation hearing in the lower house of parliament on February 24.
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