Dollar Weakens Amid Fed Rate Cut Speculation, NZD Gains Ground
The U.S. dollar weakened after a brief boost from strong retail sales data, as traders focused on potential Federal Reserve rate cuts. The New Zealand dollar rose due to domestic inflation data. Investors are also eyeing potential rate cuts from the Reserve Bank of New Zealand. The dollar index declined slightly.
![Dollar Weakens Amid Fed Rate Cut Speculation, NZD Gains Ground](https://devdiscourse.blob.core.windows.net/aiimagegallery/26_06_2024_06_03_44_2134291.png)
The U.S. dollar faced broad declines on Wednesday following a temporary ascent spurred by unexpectedly strong retail sales data. Investors are now concentrated on the likelihood of a Federal Reserve rate cut by September. Concurrently, the New Zealand dollar appreciated as local inflation data suggested persistent domestic inflation, even though the headline figure underwhelmed expectations.
The kiwi dollar climbed 0.35% to $0.6071 amid speculation of three rate cuts from the Reserve Bank of New Zealand (RBNZ) this year. "Today's CPI release confirms that inflation is all but certain to return to the RBNZ's 1-3% target by Q3," observed Abhijit Surya, an economist for Australia and New Zealand at Capital Economics.
In the broader forex market, the greenback showed a lack of momentum, unable to hold gains despite Tuesday's robust U.S. retail sales report, which indicated strong consumer resilience and bolstered second-quarter economic growth prospects. The dollar index edged down to 104.19, while the euro and Australian dollar made modest gains.
(With inputs from agencies.)
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