If the narrative is to keep rates higher for longer, then the US economy is certainly doing its part in helping the Fed achieve that. The non-farm payrolls and consumer inflation reports have served to validate the notion that perhaps we don’t need any more rate hikes. But the retail sales data yesterday reaffirmed that if the Fed so chooses to stick with higher rates, the US consumer is certainly okay with that – at least for now.
As things stand, the Fed funds futures curve is still not showing any pricing for additional rate hikes. But there is a slight shift higher going out into next year, with the first rate cut now seen in May instead.
It’s just a minor shift, all things considered. However, when you factor in this alongside higher yields and the technical stars aligning for the greenback, it is yet another supportive factor for dollar bulls to get excited about the prospects of a next leg higher.