The dollar index hovered just above 109 as US economic data fueled hopes for Federal Reserve rate cuts this year. Retail sales rose 0.4% in December, below the 0.6% forecast, while jobless claims slightly exceeded expectations at 217,000. On Wednesday, core inflation came in slightly below forecasts, prompting traders to anticipate further Fed easing. This pushed 10-year US Treasury yields down sharply by 14 basis points to around 4.65%. Markets are now pricing in 37 basis points of Fed rate cuts in total for 2025. However, the dollar's decline was tempered by uncertainty over incoming President Trump’s tariff policies, which could be inflationary.
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