## Dollar Soars, Yen Languishes as US Retail Sales Surprise
The US dollar surged to a five-month high against major currencies on Tuesday, fueled by unexpectedly strong US retail sales figures. This has raised concerns about potential intervention from Tokyo to support the weakening yen, which has fallen to its lowest level since 1990.
The Chinese yuan, meanwhile, edged slightly lower despite better-than-expected GDP data for the first quarter. This comes as policymakers strive to bolster confidence amidst a prolonged property crisis.
## US Retail Sales Surprise Fuels Dollar Rally
Data released on Monday showed a 0.7% increase in US retail sales for March, exceeding the 0.3% rise anticipated by economists. February's figures were also revised upwards, indicating a robust 0.9% rebound, the strongest gain in over a year.
This unexpected strength in consumer spending has raised questions about the timing of potential interest rate cuts by the Federal Reserve, especially considering the robust employment gains in March and rising consumer inflation.
Markets are now pricing in a 41% chance of a Fed rate cut in July, compared to around 50% before the data release. The likelihood of a September cut has also increased to nearly 46%.
## Yen at 34-Year Low, Intervention Eyed
The surge in the dollar has pushed the yen to its weakest level in 34 years, breaching the 154 per dollar mark. This has prompted speculation about potential intervention from Japanese authorities to curb the yen's decline.
Hedge funds have built up their largest bets against the yen in 17 years, suggesting a potential rebound could trigger a significant rally. Japanese Finance Minister Shunichi Suzuki has stated that he is closely monitoring currency movements and will take appropriate action if necessary.
## Yuan Edges Lower Despite Upbeat GDP Data
The onshore yuan fell to its lowest level since November, reaching 7.2422 per dollar, before recovering slightly following the release of China's first-quarter GDP data. The economy grew by 5.3% year-on-year, exceeding analysts' expectations.
However, retail sales figures missed expectations, raising concerns about consumer confidence and the unevenness of the economic recovery. The yuan is currently trading at 7.2376 per dollar, with losses limited by the positive GDP figures and state bank support.
## Euro and Antipodean Currencies Slide
The euro continued its downward trend, reaching its weakest level since November 2nd at $1.060625, following the European Central Bank's indication of a potential rate cut in June.
The Australian dollar and the New Zealand dollar also fell to five-month lows, reaching $0.64085 and $0.58735 respectively.