Anna 
The U.S. dollar experienced a slight retreat during early European trading but maintained proximity to a one-month high following robust retail sales data that raised doubts about the Federal Reserve’s commitment to early rate cuts. At 04:20 ET, the Dollar Index, measuring the greenback against a basket of currencies, was 0.1% lower at 103.107, after reaching 103.69 on Wednesday.
Resilient U.S. retail sales provided support for the dollar after coming in stronger than anticipated, aligning with recent comments from Fed officials suggesting a cautious approach to rate cuts. Thursday holds additional U.S. economic data, including weekly jobless claims, building permits, housing starts for December, and the Philly Fed manufacturing index for January.
GBP/USD rose 0.1% to 1.2685 in Europe, extending Wednesday’s rally fueled by unexpected inflation acceleration in December. This reinforces expectations of a more gradual rate cut by the Bank of England compared to other central banks.
EUR/USD remained largely unchanged at 1.0880, rebounding from a one-month low after ECB President Christine Lagarde hinted at a potential interest rate cut in the summer, contrary to market expectations for a spring cut.
In Asia, USD/JPY traded 0.2% lower at 147.84, with the yen just above a one-month low ahead of key consumer price index data on Friday, expected to show sustained inflation decline.
USD/CNY traded flat at 7.1964, with the yuan at its lowest level in nearly two months. The yuan’s outlook remains uncertain as the People’s Bank of China grapples with sluggish growth and limited room to support the currency.
