The dollar was little changed on Wednesday after U.S. retail sales rose more than expected in May, although caution kept investors from aggressively buying riskier currencies like the Australian dollar.

U.S. Federal Reserve Chairman Jerome Powell doused some of the market’s optimism on Tuesday with a rather bleak picture of the U.S. economy, while also reinforcing hopes for continued policy support.

Discouraging news over the past 24 hours — record-high coronavirus infections in six U.S. states, clashes between Indian and Chinese troops in the western Himalayas and new coronavirus cases in Beijing — also undermined sentiment.

Against a basket of other currencies, the dollar edged 0.1% lower to 96.89. The index has bottomed out after reaching a three-month low last week, but the broad outlook remains pessimistic.

The Fed’s cautious message also checked the momentum in the euro, which held below a three-month high of $1.1422 reached last week. It was trading at $1.1286 on Wednesday after rallying nearly 5% since a Franco-German proposal for a recovery fund in late May.

Brexit developments continued to hobble the British pound. Sterling was steady around $1.2576, below a three-month high above $1.28 hit earlier this month.

Source: Reuters