FOREX-Dollar hits 5-mth high, puts heat on yen; GDP helps yuan

"How it reacts around that level should provide a good indication of whether (Japanese authorities) have thrown in the towel with intervention." The offshore Chinese yuan fell to 7.2831 per dollar for its lowest mark since Nov. 14, before picking up after official data showed China's economy grew 5.3% in the first quarter year-on-year, comfortably beating analysts' expectations.

The dollar hit a five-month high against major peer currencies on Tuesday following hotter-than-expected U.S. retail sales figures, raising intervention worries as the yen languished at its lowest level since 1990. The Chinese yuan stabilised after touching its lowest since November in early Asia trading after GDP data for China's first quarter beat expectations, a boost for policymakers trying to shore up confidence in the face of a protracted property crisis.

U.S. data on Monday showed retail sales rose 0.7% last month, compared with a 0.3% rise that economists polled by Reuters had forecast. Data for February was revised higher to show sales rebounding 0.9% for the largest gain in just over a year, much stronger than the previously reported 0.6%. The latest data has raised more questions about when the Federal Reserve could begin cutting interest rates, following robust employment gains in March and a pick-up in consumer inflation.

Markets are now pricing in a 41% chance of the Fed cutting rates in July, compared with around 50% before the data, according to CME FedWatch tool. The likelihood of the first cut coming in September has bumped up to nearly 46%. "I just see no chance of a July hike, assuming we're all looking at the same data," said Matt Simpson, senior market analyst at City Index.

Underlining the market bets, the president of the San Francisco Federal Reserve Bank, Mary Daly, said late on Monday in the United States that there is "no urgency" to cut U.S. interest rates. The U.S. dollar index touched 106.37 on Tuesday, the highest since Nov. 2.

In the face of dollar strength, the yen breached 154 per dollar to hit its weakest level in 34 years. That kept traders on high alert for yen-buying intervention from Japanese authorities. With hedge funds building up their largest bets against the currency in 17 years, a rebound in the yen could trigger a significant rally.

In Tokyo, Japanese Finance Minister Shunichi Suzuki said on Tuesday he was closely watching currency moves and will take a "thorough response as needed", after the dollar hit a 34-year high. The yen last hovered around 154.40 per dollar, close to the new resistance level of 155.

Despite verbal warnings, "the test of 155 seems too tempting," and market forces are likely to drive the currency pair higher, said Simpson at City Index. "How it reacts around that level should provide a good indication of whether (Japanese authorities) have thrown in the towel with intervention."

The offshore Chinese yuan fell to 7.2831 per dollar for its lowest mark since Nov. 14, before picking up after official data showed China's economy grew 5.3% in the first quarter year-on-year, comfortably beating analysts' expectations. But China's retail sales missed expectations, a worrying sign for consumer confidence and reflection of the economy's uneven recovery.

Elsewhere, the euro brushed $1.06070, the weakest since Nov. 2, as it continued to slump after the European Central Bank last week left the door open to a rate cut in June. The Australian dollar dropped to $0.64085, its lowest since Nov. 14.

The kiwi slipped to a five-month low of $0.58815. Bitcoin fell 0.26% to $62,978.00.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)