Investing.com - The US dollar experienced a dip on Wednesday, following weak retail sales data that boosted expectations of impending Federal Reserve rate cuts. Meanwhile, the British pound saw a slight decline in anticipation of UK inflation data due later in the day.
Tuesday's figures showed a marginal rise in US retail sales for May, with data for the prior month being significantly revised downwards. This suggests a sluggish economic activity in the second quarter, leading to a slight drop in the greenback. However, the losses were limited against a basket of currencies as the euro, which holds the largest weight in the dollar index, continues to be affected by political uncertainties in France and the wider European bloc.
The euro was slightly lower at $1.0738, while the dollar index steadied at 105.28.
The sterling fell 0.03% to $1.2705 ahead of the UK inflation data due later on Wednesday and the Bank of England's policy decision on Thursday. The bank is expected to keep rates on hold.
The Australian dollar outperformed the US dollar, bolstered by a hawkish stance from Reserve Bank of Australia (RBA) Governor Michele Bullock. The Aussie rose 0.08% to $0.6661, extending its 0.66% gain from the previous session. On the other hand, the New Zealand dollar fell 0.08% to $0.6140.
The yen remained steady at 157.89 per dollar, as interest rate differentials between Japan and the US continue to exert pressure. The minutes of the Bank of Japan's (BOJ) April policy meeting revealed a discussion on the potential impact of a weak yen on prices. However, the market showed little reaction as investors await the next BOJ meeting in July. BOJ Governor Kazuo Ueda hinted at a potential interest rate hike next month, depending on forthcoming