Anna 
The dollar index reached a fresh one-month high following robust U.S. retail sales data, diminishing expectations for imminent Federal Reserve rate cuts. Retail sales grew 0.6% in December, surpassing expectations and underscoring economic strength. While markets still anticipate a Fed rate cut in March, the likelihood of a 25 basis points cut decreased to 53.2%.
The dollar index, tracking the greenback against major currencies, rose to 103.69, its highest since December 13. Federal Reserve Governor Christopher Waller’s comments contributed to the dollar’s strength, emphasizing the need for caution in rate adjustments. The dollar gained 0.71% against the Japanese yen and hit a two-month high against the offshore yuan.
Despite European Central Bank (ECB) policymakers attempting to dispel rate cut expectations, the euro slipped against the dollar. ECB President Christine Lagarde stated the central bank’s commitment to achieving the 2% inflation target. The British pound rose against the dollar after British inflation data reinforced expectations of a slower rate cut by the Bank of England.
