Singapore, April 17 (BNA): The dollar rebounded from a one-year low as resilient US core retail sales, rising short-term inflation expectations and impressive earnings from Wall Street banks raised market expectations of a rate hike in May. .
While US retail sales fell more than expected in March, so-called core retail sales, which exclude automobiles, gasoline, building materials and food services, fell just 0.3% last month, data released on Friday showed, according to Reuters.
Adding to the mix of resilient US economic data was a strong run in first-quarter 2023 earnings from JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, shrugging off concerns about the banking crisis that unfolded in March.
Against a basket of currencies, the US dollar index rose 0.15% to 101.82, off Friday’s one-year low of 100.78.
Friday marked the fifth consecutive weekly loss for the index.
The euro fell 0.2 percent to $1.0965, while the British pound fell 0.22 percent to $1.2387.
Money markets are now pricing in a roughly 81% chance that the Federal Reserve will raise interest rates by 25 basis points next month, up from about a 69% chance last week.
Short-term inflation expectations also increased, with the University of Michigan’s preliminary reading for April showing that one-year inflation expectations rose to 4.6% from 3.6% in March.
US Treasury yields jumped in the wake of the data release on Friday, and remained elevated.
The two-year US Treasury yield, which is usually in line with interest rate expectations, held steady at 4.1137%, after hitting a nearly two-week high of 4.137% on Friday.
The benchmark 10-year yield was at 3.5261%.
The dollar rose 0.16% against the Japanese yen to 133.96, as the Bank of Japan remains hawkish as it continues to keep interest rates ultra-low.
The Australian dollar fell 0.19% to $0.6696, while the New Zealand dollar fell 0.39% to $0.6186.
In Asia, a slew of economic data out of China this week took center stage, as traders looked for clues as to how the recovery in the world’s second-largest economy might play out.
“We expect March activity data to show a moderate acceleration in growth momentum, but we are unlikely to see major positive surprises,” said analysts at MUFG.
Last week, China announced an unexpected increase in its exports in March, which jumped 14.8% from a year earlier, after five consecutive months of declines.
The offshore yuan fell more than 0.1% to 6.8807 per dollar.
NAA