The dollar rose after a better-than-estimated retail sales report and a drop in jobless claims reinforced speculation the Federal Reserve will stay on hold for now. Stocks and bonds wavered.

The greenback resumed its month-to-date climb while the S&P 500 and bond yields were little changed. Money markets are pricing fewer than two Fed rate cuts this year, down from the possibility of three at the start of the month.

READ MORE: No Fed cut in July, nearly all economists surveyed say

US retail sales saw a broad advance, potentially tempering some concerns about a retrenchment in consumer spending. Separate data showed applications for US unemployment benefits declined for a fifth straight week to the lowest level since mid-April, showing a solid job market.

“The consumer came back to life in June,” said David Russell at TradeStation. “Other data like initial jobless claims and Philly Fed also painted the picture of a strong economy. While it’s good for growth overall, it makes it harder to justify rate cuts.”

In such an environment, Russell says that could also help put a floor under the US dollar following a big selloff in the first half of the year.

READ MORE: Foreign buyers snapping up U.S. homes again

To Neil Dutta at Renaissance Macro Research, while retail sales beat estimates, enthusiasm ought to be tempered somewhat given the pick-up in consumer goods prices over the month.

Speculation over Fed Chair Jerome Powell’s future rattled markets on Wednesday before President Donald Trump downplayed the prospect of replacing him. Trump, who has long pushed for lower interest rates, has made no secret of his frustration with the Fed Chair.

The value of retail purchases, not adjusted for inflation, increased 0.6% after declines in the prior two months. That exceeded nearly all estimates in a Bloomberg survey of economists. Excluding cars, sales climbed 0.5%.

“A blowout retail sales number shows that consumers are still spending and are keeping the economy growing,” said Chris Zaccarelli at Northlight Asset Management. “There has been a lot of talk about tariffs and the stock market back to all-time highs, but there has been less talk about the economy at full employment and a consumer who continues to spend.”

Although valuations are high, Zaccarelli notes that as long as the economy continues to expand and unemployment remains low, then people will continue to spend and the flywheel can keep generating higher profits, which is the engine for higher stock prices.

“Consumers seem to be over the tariff shock in April and are back at it with spending,” said Jamie Cox at Harris Financial Group. “Now we just need to see if the Federal Reserve has enough inflation data to communicate more clearly that September will restart the rate cutting cycle.”

Estelle Ou at Bloomberg Economics says that despite the solid retail-sales report, given price increases in several goods categories, it’s difficult to untangle whether most of the rebound is due to price increases or solid underlying demand. 

“We think the former is more likely, given low business sentiment and signs of weakness in other discretionary services spending,” she noted.

Fed Governor Adriana Kugler said the US central bank should keep holding interest rates steady “for some time,” citing accelerating inflation as tariffs start to boost prices.