Harry Robertson and Kevin Buckland
LONDON/TOKYO (Reuters) – The dollar rose on Tuesday, easing the euro slightly as traders awaited a report on U.S. retail sales and comments from Federal Reserve officials that would help determine the timing of interest rate cuts.
The index, which measures the currency against six major peers, was last up 0.18% at 105.46. It lost 0.2% on Monday, retreating from Friday’s six-week high of 105.80.
The dollar was pulled in different directions as tepid U.S. inflation figures contrasted with the overall hawkish stance of Fed officials at last week’s policy meeting, when they cut their previous average forecast of a three-quarters point rate cut this year to one.
The dollar’s 0.6% rise last week was largely driven by a sharp sell-off in the euro after French President Emmanuel Macron called shocking snap elections in response to the rout of his ruling centrist party by Marine Le Pen’s eurosceptic Rally National in European Parliament elections.
The euro has steadied this week and was last down 0.17% at $1.0716, but rose from a six-week low of $1.0668 on Friday after rising 0.26% on Monday.
“Over the weekend, France’s Le Pen said she would be willing to work with President Macron and would not seek him out,” said Mohit Kumar, chief European economist at Jefferies.
“Part of the recent risk reduction measures have been driven by concerns about Frexit and the breakup of the eurozone,” he said. “These fears are exaggerated.”
US retail sales data will be released at 12:30 GMT (8:30 am ET). They are expected to show 0.3% month-on-month growth in May, following zero growth in April.
Philadelphia Fed President Patrick Harker said Monday he was in the single-policy camp but left open the possibility of changing his view depending on incoming data.
A long list of Fed officials will take the podium at various venues later in the day, including Susan Collins of the Boston Fed and Thomas Barkin of the Richmond Fed.
“If you look at the flow of data coming out of the U.S., the inflation data and the labor market data point to a turn in Fed policy,” even though officials have not forecast a rate cut, said Rodrigo Catril, senior currency analyst. Strategist at National Australia Bank (OTC:).
“It’s the safe-haven appeal of the dollar that’s keeping it going at the moment,” Catril added.
The dollar rose 0.26% to 158.13 yen, returning to Friday’s six-week high of 158.26. Sterling fell 0.15% to $1.2686.
Meanwhile, the dollar was unfazed by the Reserve Bank of Australia’s expected decision to keep interest rates on Tuesday and was little changed at $0.6615.
“The RBA’s position has been well expressed: they are in a wait-and-see mode until they get more data on inflation,” said NAB’s Catril.
In cryptocurrencies, Bitcoin fell about 1.6% to $65,270, near a one-month low.