TOKYO- The dollar rose to a five-month high against major peer currencies on Tuesday following hotter-than-expected US retail sales figures, raising worries of an intervention from Tokyo as the yen languished at its lowest since 1990.
The Chinese yuan edged marginally lower even after GDP data for China’s first quarter beat expectations in a boost for policymakers trying to shore up confidence in the face of a protracted property crisis.
Data on Monday showed US retail sales rose 0.7 percent last month, compared with a 0.3 percent rise that economists polled by Reuters had forecast. Data for February was revised higher to show sales rebounding 0.9 percent for the largest gain in just over a year, much stronger than the previously reported 0.6 percent .
The latest data has raised more questions about when the Federal Reserve could begin cutting interest rates, following robust employment gains in March and a pick-up in consumer inflation.
Markets are now pricing in a 41 percent chance of the Fed cutting rates in July, compared with around 50 percent before the data, according to CME FedWatch tool. The likelihood of the first cut coming in September has bumped up to nearly 46 percent .
“I just see no chance of a July cut, assuming we’re all looking at the same data,” said Matt Simpson, senior market analyst at City Index.
Underlining the market bets, the president of the San Francisco Federal Reserve Bank, Mary Daly, said late on Monday in the United States that there is “no urgency” to cut US interest rates.
The US dollar index touched 106.39on Tuesday, the highest since Nov. 2.
In the face of dollar strength, the yen breached 154 per dollar to its weakest in 34 years.
