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Herbert Rush and Samuel Indyk
NEW YORK/LONDON (Reuters) – The US dollar fell against most major currencies on Tuesday after China’s growth data beat expectations.
China’s gross domestic product (GDP) grew 4.5% year-on-year in the first three months of the year, a 4% expansion as the world’s second-largest economy rebounded as the end of COVID-19 curbs lifted. Exceeded analyst expectations.
Separate data on March activity in China also showed that retail sales growth accelerated to 10.6%, beating expectations and hitting a nearly two-year high.
“The idea that the dollar will weaken a bit from here against the majors is premised on a strong China,” said Thierry Wisman, global currency and rates strategist at Macquarie in New York. “If the rest of the world is doing better or better than the US in terms of economic activity, that’s usually bad for the dollar.”
Wisman said the high likelihood of disinflation in the United States at the moment is also a reason for the weaker dollar and the reason for the Federal Reserve to pause rate hikes.
“It’s entirely possible that the euro and pound will continue to perform well,” he said. “It starts with the story of disinflation in the US, which is not what people really get.”
EUR
up 0.37%
$
1.0966
The Dollar Index, a measure of the U.S. dollar against six major currencies, fell by more than 0.5% for the second day in a row.
Slide 0.372%
The index has risen more than 1% over the last two trading sessions.
China’s offshore renminbi fell 0.02% to $6.8799 to the dollar.
The British pound surged as wage growth remained higher than expected despite an unexpected rise in the unemployment rate in the three months to February.
“Given the many crises in Europe since late last year, the surprise this year was that the euro and pound were particularly strong,” Wisman said.
Sterling last traded for $
1.2433
,
0.48% increase
On that day.
Futures traders have priced in an 87.4% chance that the Fed will raise rates by 25 basis points at its next meeting in May, with traders still hoping for a rate cut towards the end of the year.
Single-family home construction in the United States
A second consecutive month of increases in March and a surge in future building permits offered a glimpse of hope in the sluggish housing market ahead of the busy spring sales season.
Commonwealth Bank of Australia (CBA) economist Christina Clifton said: “With the Fed likely nearing the end of its tightening cycle, the dollar may remain sensitive to strength or otherwise in economic data. there is,” he said.
The Australian dollar rose 0.34% against the dollar to $0.672 after the Reserve Bank of Australia (RBA) minutes said the central bank had considered an 11th consecutive rate hike in April and then decided to suspend it. rice field.
However, the RBA said it was ready to tighten further if inflation and demand did not cool.
The yen rose 0.38% to 133.99 yen to the dollar.
mexican peso
0.33% lost
against the dollar
18.07
.
(Reporting by Herbert Lash; additional reporting by Samuel Indyk, London and Ankur Banerjee, Singapore; editing by Marguerita Choy and Mark Potter)
