By Amanda Cooper
LONDON, Feb 16 (Reuters) – The dollar remained stable on Thursday as investors turned to riskier currencies after a string of strong economic data in the United States boosted confidence in global growth prospects, despite the fact that the Federal Reserve seems ready to continue raising interest rates.
* Data from the US Commerce Department showed on Wednesday that US retail sales rebounded strongly in January after two consecutive monthly declines, led by purchases of high-value items such as motor vehicles and other goods.
* The data came a day after US inflation figures showed consumer prices slowed but remained stable. Data from earlier this month also showed that job growth in the United States accelerated sharply in January, indicating a resilient economy.
* However, the question for market watchers is how resilient the economy can continue to be, particularly when rates are rising far more than many originally thought.
* “The data is strong and leading people to discount the ‘catastrophic recession’ scenario that everyone expected at the start of the year, but I’m not sure that a CPI and retail sales data enough to make everyone think all is well in the economy again,” said Michael Brown, strategist at TraderX.
* The interest rate futures market shows that US rates could peak near 5.25% in July, before falling back to 5.0% by the end of the year.
* The US dollar index fell 0.1% to 103.67, after hitting a six-week high of 104.11 the previous day.
* Expectations for US monetary policy have changed dramatically even since the start of the month. On February 1, markets were expecting a July high of 4.83%, with a decline to 4.5% by the end of the year.
* With the dollar falling, the euro rose 0.2% to $1.07095, after hitting a six-week low earlier in the week. Nonetheless, it remains 11.5% above the 20-year low it hit in late September.
* The pound rose 0.21% to $1.2064, after losing more than 1% on Wednesday.
* For its part, the yen appreciated overall, gaining 0.3% against the greenback at 133.73 units to the dollar, and adding 0.1% against the euro at 143.16 units. Yen traders await a speech by Kazuo Ueda, candidate for governor of the Bank of Japan, during a confirmation hearing in the lower house of parliament on February 24.
* The Chinese yuan in international markets remained stable at 6.864 units to the dollar, around its weakest level in six weeks.
(Additional reporting by Rae Wee in Singapore; editing in Spanish by Ricardo Figueroa)