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U.S Dollar on Slight Dip but Still Near One-Month High Following Strong Retail Sales Data

U.S Dollar on Slight Dip but Still Near One-Month High Following Strong Retail Sales Data

U.S Dollar Marks a Modest Dip Yet Holds Steady

During the early hours of European trading Thursday, the U.S. dollar tapered off slightly. However, it lingered near its one-month peak, spurred by robust U.S. retail sales figures that conjured up questions about earlier than expected rate cuts by the Federal Reserve.

At 04:20 ET (09:20 GMT), the Dollar Index, a measure of the greenback against six other major currencies, dipped by 0.1% to 103.107. On Wednesday, it had reached 103.69, a figure that had not been seen since December 13.

U.S Economy's Resilience Bolsters Dollar

A surge was noted in the dollar late in the day after the announcement of stronger than anticipated U.S. retail sales figures. This news back up recent assertions by multiple Fed officials regarding the possibility of maintaining higher rates for a longer period.

Additional U.S. data to be reviewed on Thursday includes weekly jobless claims, December's housing starts and building permits, and the Philly Fed manufacturing index for January.

The resilience of U.S. economic activity often proves surprising, giving policymakers another reason to proceed with caution.

Meanwhile, figures from the U.K. released Wednesday revealed that the annual inflation rate had accelerated in December for the first time within a 10-month period. The next U.S. CPI announcement is set for February 13.

Sterling Sees a Lift from Steady Inflation

In European trade, GBP/USD inched up 0.1% to 1.2685, continuing Wednesday's upward trend after figures indicated an unexpected inflation increase in December. This has reinforced speculations that the Bank of England will be slower to reduce rates compared to its counterparts.

Yen Braces for Key Inflation Figures

Over in Asia, USD/JPY dipped 0.2% down to 147.84, with yen hovering just above a more than a month low. This comes ahead of key consumer price index data, set to be announced on Friday, which is projected to show a continued inflation decline.

A gloomy outlook is forecasted for the yuan as the PBOC faces slow growth and limited avenues to continue supporting the currency.

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