NEW YORK: The U.S. dollar index was down slightly for a second straight sesson on Wednesday as investors watched for signs on whether tensions in Ukraine could subside, but stronger-than-expected U.S. retail sales data helped to limit the index’s decline.
The index briefly pared losses after data showing U.S. retail sales rebounded sharply in January, which bolstered the case for interest rate hikes from the U.S. Federal Reserve starting in March.
Expectations that the Fed will raise rates have helped to give support to the dollar.
Investors also are awaiting the release of minutes later in the day from the Fed’s January meeting.
The dollar index was last down 0.1%, while the euro was up 0.1% at $1.1366. The U.S. dollar was down 0.2% against the Swiss franc and down 0.1% against the Japanese yen. The Russian rouble strengthened 0.50% versus the greenback at 75.35 per dollar.
On the geopolitical front, the United States and NATO said Russia was still building up troops around Ukraine on Wednesday despite Moscow’s insistence it was pulling back.
The Russian defence ministry said its forces were pulling back after exercises in southern and western military districts near Ukraine.
“We did see the dollar fall to lows for the week earlier today due to reduced concerns about the Ukraine situation, but once again this parade of robust U.S. data continues,” said Joseph Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“Strong retail sales are helping to allay fears of markedly slower growth in the first quarter, so once again this is keeping pressure on the Fed to raise rates boldly next month,” he said, adding, “the Fed minutes today may understate how hawkish the Fed has become (as) we’ve had such strong data since officials last met.”
Earlier this week, St. Louis Fed President James Bullard reiterated calls for a faster pace of Fed rate hikes.
Oil prices rallied, and the Canadian dollar rose 0.19% versus the greenback at 1.27 per dollar.
Sterling was last trading at $1.3573, up 0.30% on the day. Data earlier showed UK inflation hit a nearly 30-year high of 5.5%.
The Bank of England has already raised interest rates twice since December and financial markets expect a further rate rise on March 17 after the BoE’s next meeting. In cryptocurrencies, bitcoin was down 2% at $43,686.
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