Dollar Treads Water as Investors Mull Fed Outlook
The dollar index held steady around the 100 mark on Wednesday, as investors continued to assess the outlook for Federal Reserve monetary policy.
The index, which measures the value of the dollar against a basket of six major currencies, was little changed after data showed US retail sales rose 0.2% month-on-month in June, the lowest reading in three months and below forecasts for a 0.5% gain.
The subdued performance of the dollar came as investors weighed the implications of the latest economic data for the Fed’s monetary policy stance. While the central bank is widely expected to raise interest rates by 25 basis points this month, some analysts believe that the recent slowdown in economic growth could lead the Fed to slow the pace of its tightening cycle.
“The dollar is likely to remain range-bound in the near term as investors assess the Fed’s next move,” said analysts at ING Bank. “However, if the Fed does signal that it is willing to pause its tightening cycle, the dollar could come under renewed pressure.”
Against the euro, the dollar was little changed at 1.0250. The euro was also supported by data showing that German industrial production rose by 0.2% month-on-month in June, in line with expectations.
Against the yen, the dollar edged up to 137.50. The yen was under pressure as investors continued to sell the Japanese currency on concerns about the country’s economic outlook.
Overall, the dollar is likely to remain under pressure in the near term as investors continue to weigh the implications of the latest economic data for the Fed’s monetary policy stance. However, if the Fed does signal that it is willing to pause its tightening cycle, the dollar could come under renewed pressure.
- The dollar index held steady around the 100 mark on Wednesday.
- The index was little changed after data showed US retail sales rose 0.2% month-on-month in June.
- Investors are weighing the implications of the latest economic data for the Fed’s monetary policy stance.
- The dollar is likely to remain range-bound in the near term.
- However, if the Fed does signal that it is willing to pause its tightening cycle, the dollar could come under renewed pressure.