USD edged higher against most of its major rivals in the European session on Thursday as investors waited for a slate of the U.S. economic reports later in the day, which could provide more clues on the Federal Reserve’s next policy moves.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, increased 0.05% from the previous close to 102.84.
Tuesday’s release of slightly-hotter-than-expected consumer inflation figures had little impact on markets’ views on the prospects for Fed interest rate cuts.
According to the CME FedWatch Tool, markets are currently seeing a 65.7% probability that the U.S. central bank will reduce its rates in June and approve at least two additional decreases by the end of the year.
Markets will face another test of their rate expectations at 12:30 GMT when reports on producer prices and retail sales for February will be released. This batch of releases will be the last major dataset ahead of next week's Fed policy meeting.
Economists are expecting an energy price-induced rise in the headline producer price index (PPI) to 1.1% in February from 0.9% YoY in the previous month, a slip in the core PPI to 1.9% YoY from 2.0% YoY, a 0.8% MoM rebound in retail sales, following an 0.8% MoM decline in January.
Hotter-than-anticipated data will add to arguments for the Fed’s policymakers to wait until summer months to start policy easing.