Investing.com – The U.S. dollar saw a slight uptick on Thursday, hovering near seven-month lows following the release of mild inflation data, while the sterling strengthened after positive growth figures.
At 05:45 ET (09:45 GMT), the Dollar Index, which measures the dollar against a basket of six other currencies, was up 0.1% at 102.452, just above levels last seen in January.
Dollar on the Decline Before Retail Sales Data
The U.S. dollar has been struggling this week, with recent data indicating moderate inflation in July and a slowdown in annual inflation to below 3% for the first time since early 2021.
This trend, along with other economic indicators, suggests that inflation is decreasing, potentially giving the Federal Reserve room to lower interest rates. The upcoming Fed meeting in September is likely to result in a rate cut, although the magnitude of the reduction is still up for debate.
All eyes are now on U.S. retail sales data, which is crucial as consumer spending drives about two-thirds of economic growth in the U.S. The release is expected to show a monthly growth of 0.4%, a slight improvement from the previous flat reading.
The Fed has kept its benchmark interest rate unchanged since last July, after a series of hikes in previous years.
Sterling Boosted by UK Growth Numbers
Over in Europe, the sterling was up 0.2% at 1.2845 following data showing a 0.6% growth in the UK economy in the second quarter of 2024. This growth builds on a strong 0.7% recovery in the first quarter.
Since the onset of the COVID-19 pandemic, Britain’s economy has been growing slowly, with a total expansion of 2.3% between late 2019 and mid-2024. The Bank of England recently cut interest rates for the first time in over four years, but the possibility of further cuts remains uncertain.
Meanwhile, the euro slipped marginally to 1.1011 but remained close to its recent high of 1.1047, the highest level this year. The European Central Bank initiated rate cuts in June, and more cuts are anticipated in September.
Yen Holds Steady After Japanese GDP Data
In Asia, the yen rose 0.1% to 147.43, stabilizing after Japan’s economy showed better-than-expected growth in the second quarter. The Bank of Japan predicts that rising wages will support economic growth, giving room for further interest rate hikes.
Elsewhere, the Chinese yuan fell slightly to 7.1587 as mixed economic indicators painted a varied picture of the Chinese economy. While consumer spending and inflation showed improvement, other areas like fixed asset investment lagged behind.
Overall, these updates highlight the shifting economic landscapes in key regions, impacting currency values and potential policy decisions.