The US dollar remained in a consolidation phase on Thursday, holding close to multi-week highs. Inflation data released on Wednesday painted a broadly stable picture. Producer prices increased moderately on the month. Taken together with earlier CPI data, inflation trends appear neither re-accelerating nor cooling decisively.
Retail sales provided a contrasting signal, rebounding strongly in November. Improved consumer spending, suggesting household demand remains relatively healthy, limiting immediate downside risks to growth.
Minneapolis Fed President Neel Kashkari noted that there was no need to cut rates soon, given the resilient labour market and an inflation rate above target. This reinforces the current wait-and-see approach and provides support to both the greenback and yields.
At the same time, Fed independence concerns remain a risk for the currency, although recent remarks from Trump helped ease immediate fears by signalling no imminent move to remove Powell. Any indication that the Federal Reserve’s independence could be compromised would likely trigger sharp volatility across both currency and bond markets.
Attention now turns to today’s jobless claims report, which could offer further insight into labour market conditions. Speeches from additional Fed officials will also be closely monitored.
