By Rae Wee
SINGAPORE, July 19 (Reuters) - The dollar held just above an over one-year low on Wednesday as traders assessed the U.S. rate outlook, while the New Zealand dollar spiked briefly after a higher-than-expected inflation reading pushed back prospects of policy easing further out.
The U.S. dollar managed to nudge up after a mixed retail sales report overnight, with sales growth missing forecasts in June but consumers boosted or maintained spending elsewhere, pointing to consumer resilience that is likely to keep the economy on a solid growth path.
Against a basket of currencies, the U.S. dollar rebounded from a 15-month low hit in the previous session, with its index steadying at 99.943 in early Asia trade.
"The (data) showed retail sales being resilient, and I think that's because the U.S. wage growth is still strong," said Tina Teng, market analyst at CMC Markets.
The greenback has paused its steep decline from last week in the wake of a cooler-than-expected U.S. inflation reading that led to traders pricing in an imminent peak in U.S. rates.
Economists polled by Reuters expect the Federal Reserve to deliver a 25-basis-point rate hike at its upcoming policy meeting this month, with a majority betting that to bring an end to the central bank's current monetary tightening cycle.
Across the Atlantic, European Central Bank (ECB) policymakers are also adopting a more dovish tone on the rate outlook, with governing council member Klaas Knot saying in an interview on Tuesday that the ECB will look closely for signs of inflation cooling down in the coming months to avoid overly tightening policy.
The euro was last steady at $1.1230, away from the previous session's 17-month peak of $1.1276.
Sterling bought $1.3035, ahead of UK inflation data due later on Wednesday.
"The stickiness of UK inflation measures has contrasted notably with price measures in both the euro zone and the U.S. which have been moving lower," said Rabobank's head of FX strategy Jane Foley.
"If the UK economy remains resilient, we expect that (the pound) is likely to react well to hawkish expectations regarding (Bank of England) policy.
"However, if recession risks rise in the UK, the pound may revert to pushing lower on rate rises as investors take fright on the overall UK economic backdrop and cut back their long (pound) positions."
Over in New Zealand, consumer inflation came in slightly above expectations in the second quarter, data out on Wednesday showed, causing a brief spike in the kiwi as traders pushed out expectations for when the Reserve Bank of New Zealand might start cutting its cash rate.