The dollar index edged up to 103.5 on Wednesday, extending gains for a third session, after retail sales came better-than-expected, reinforcing the view the Fed may not cut interest rates as early as initially anticipated. Bets for a 25bps rate cut in March currently stand at around 56%, well below 77% early in the week. Meanwhile, comments from Fed officials will be keenly scrutinized for further clues on the Fed’s plans. Yesterday, Federal Reserve Governor Christopher Waller said that “with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past”. The biggest buying activity was against the yen, the Swiss franc and the Aussie.
