U.S. retail sales data and Fed’s hawkish speakers provide support for dollar

The updated U.S. data was published on Tuesday, and its figures disclosed a fact that lower levels of consumer price inflation from the previous week weren’t a one-shot. This reinvigorates the hopes of a slowdown in pace of the Fed’s aggressive rate hiking, which has caused a rapid growth of the dollar in the current year.

Still, retail sales data of the U.S. published on Wednesday showed figures above expected, and it gave the dollar some additional support, as it was reported by Reuters. Investors are now waiting for any clues and hints for the Fed’s officials on what to expect next from the pace of rate hikes.

As it was said by Oanda’s senior market analyst in New York Edward Moya, a very large number of people are currently focused on further possibles moves of the Fed and the ECB.

Fed Governor Christopher Waller, who is well-known for his longstanding and consistent "hawkish" position, spoke on this issue by clarifying that there are still ways for the Fed to continue rate hikes. He also stated the necessity to deliver more hikes in 2023, while admitting that the recent data made him "more comfortable" with a possibility of a slowdown to a 50-basis point increase next month.

At the same time, Mary Daly, San Francisco Fed President, said it would be sensible for the Federal Reserve to increase its policy rate to a range of 4.75%-5.25% by the beginning of 2023. As she said to CNBC, putting rate hikes on hold is out of the question.

Edward Moya, in his turn, reacted to statements made by Waller and Daly by calling them "somewhat hawkish," while also mentioning that there’s a lot of noise now in the forex market. He additionally noted that retail sales figures signalling more stable economic resilience might be perceived as a reason to consider the Fed’s aggressive position on inflation to be reasonable and justified.