The U.S. dollar showed strength against other major currencies due to better-than-expected retail sales data, causing concerns about potential intervention by Japan to support the weakening yen. The robust U.S. retail sales growth raised speculation about the Federal Reserve's future decisions on interest rates, with market expectations shifting towards a possible rate cut later in the year.
Amidst the currency movements, the Chinese yuan experienced a slight decrease, despite surpassing GDP expectations for the first quarter. China's retail sales figures fell short of projections, indicating potential challenges in consumer confidence and reflecting the nation's uneven economic recovery. Despite the positive GDP report, the onshore yuan dipped to its lowest level since November before recovering, with support from state banks limiting its losses.
In response to the currency fluctuations, Japanese Finance Minister Shunichi Suzuki expressed vigilance over the yen's depreciation and readiness to take necessary actions. Hedge funds have notably increased bearish bets on the yen, raising concerns about a potential rally if the currency rebounds. Market analysts are closely monitoring the yen's movement, with attention focused on the resistance level of 155 per dollar as a potential indicator of Japanese intervention or lack thereof.
Other major currencies also faced pressure in the market, with the euro declining to its lowest level since November and the Australian dollar sliding to its weakest point since mid-November. The New Zealand dollar similarly dropped to a five-month low, reflecting a broader trend of currency depreciation against the strong U.S. dollar. The overall market sentiment remains cautious, with speculations about central bank actions and economic indicators influencing currency trajectories.