USA: Dollar Index Holds Traction.

The dollar index firmed to above the 97.5 mark on Wednesday, extending the traction since touching a near four-year low of 96 in late February as global markets reconsidered their aversion to the greenback and trimmed the magnitude of rate cuts expected by the Federal Reserve this year. Minutes from the Fed's last meeting indicated that many members believe that the disinflation process may take longer than previously expected, while few members went as far as noting that rate hikes could be necessary to prevent the inflation rate from stabilizing above the 2% target. The delayed January CPI reflected a 2.4% annual increase, less than expected, but remained firmly above target. Meanwhile, the aversion to dollar-denominated assets eased from their peak in late January amid signs of improved relations between the US and the EU and the nomination of the Fed Chairmanship to Kevin Warsh, a balance sheet hawk. The DXY was also supported by a softer sterling, yen, and Canadian dollar.