## The Dollar Rises, Yen Languishes, and Yuan Edges Lower
The US dollar climbed to a five-month high against major currencies on Tuesday, fueled by stronger-than-expected US retail sales figures. This has raised concerns about potential intervention from Tokyo as the Japanese yen continues to weaken, reaching its lowest level since 1990.
Meanwhile, the Chinese yuan edged slightly lower despite exceeding expectations in its first-quarter GDP data. This provided a boost for policymakers aiming to bolster confidence amidst a prolonged property crisis.
The robust US retail sales data, exceeding forecasts and showing the largest gain in over a year, has sparked questions about the timing of the Federal Reserve's potential interest rate cuts. Markets are now pricing in a 41% chance of a cut in July, compared to around 50% before the data release.
The dollar's strength has pushed the yen to its weakest point in 34 years, breaching the 154 per dollar mark. This has put traders on high alert for potential yen-buying intervention from Japanese authorities, especially with hedge funds building up their largest bets against the currency in 17 years.
Japanese Finance Minister Shunichi Suzuki has stated that he is closely monitoring currency movements and will take appropriate action as needed. However, market forces seem likely to drive the yen even higher, with the 155 level acting as a key test.
Despite exceeding expectations, China's first-quarter GDP growth was accompanied by disappointing retail sales figures, reflecting uneven economic recovery and potentially impacting consumer confidence. The yuan initially fell to its lowest level since November but later recovered thanks to the positive GDP data and state bank support.
The euro and the Australian and New Zealand dollars also weakened against the US dollar, with the euro reaching its lowest point since November 2nd. This follows the European Central Bank's recent decision to leave the door open for a potential rate cut in June.