The US dollar rose on Thursday ahead of key economic data releases and Jerome Powell's speech on Friday, after Federal Reserve Board of Governors (Fed) member Christopher Waller said the central bank is in no rush to cut interest rates.
Christopher Waller said in a speech on Wednesday, "There is no rush to cut rates just yet. The inflation data confirm that it is more appropriate to keep the rate at current levels for longer, which will help to bring inflation into a stable 2% range."
The statement prompted markets to revise their forecasts for when the Fed will begin cutting rates, according to Reuters. The CME FedWatch tool now indicates that there is a 60% chance that the Federal Reserve will cut rates in June.
Kyle Rodda of Capital.com says Waller's testimony underscores the Fed's fears of rising inflation.
"A strong inflation reading tomorrow could call into question the market's justification for three rate cuts in 2024," Rodda pointed out.
The US Dollar Index .DXY, which tracks the greenback against six of its global counterparts, was up 0.29% at 104.59.
Meanwhile, USD/JPY was up 0.05% at 151.40, despite talk of possible currency intervention by Japanese authorities to stabilize the yen.
Takeshi Ishida of Resona Holdings said that the main event for the USD/JPY pair will be Friday's US inflation data.
"Once USD/JPY reaches 152, there's likely to be a sharp upward move, and that's when intervention could take place," Ishida said.
Japan has intervened in the currency market three times in 2022 by selling dollars to buy yen, first in September and then in October, when the yen fell to a 32-year low of 152 per dollar.
At the same time, the Chinese yuan has been able to hold its own against the US dollar. The USD/CNY is currently trading at 7.2273.
EUR/USD and GBP/USD fell 0.30% and 0.21% to 1.0793 and 1.2611, respectively.
AUD/USD and NZD/USD plunged 0.51% and 0.56% to 0.6500 and 0.5969, respectively.
Data from the Australian Bureau of Statistics showed that retail sales growth slowed to 0.3% in February from 1.1% in January. With annualized CPI growth of just 3.4% in February, below forecasts, the likelihood of an interest rate cut by the Reserve Bank of Australia (RBA) in August has fallen sharply.
Capital Economics economist Abhijit Surya now expects the RBA to cut rates in November.
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