Strong US retail sales data triggered a rise in the dollar against the world's major currencies on Tuesday.
The latest report from the US Commerce Department showed that the country's retail sales rose by 0.7% in March. Economists had expected retail sales to rise by 0.3%.
"Strong retail sales growth in March, accompanied by upward revisions to the previous two months, shows that consumers continue to drive the broader economy," said Kathy Bostjancic, Chief Economist at Nationwide.
The data has caused markets to revise their expectations for when the Federal Reserve (Fed) will begin cutting interest rates, Reuters reported.
CME's FedWatch data showed that markets now put the probability of a Fed rate cut at the June meeting at 41%, down from 50% before the retail sales data was released.
"I just don't see any chance of a cut in July, assuming we're all looking at the same data," said Matt Simpson, Senior Market Analyst at City Index.
Underscoring market bets, Federal Reserve Bank of San Francisco President Mary Daly said late Monday night in the United States that there was "no urgency" to cut US interest rates.
The Dollar Index (DXY), which tracks the greenback against a basket of global currencies, was up 0.13% at 106.3.
The USD/JPY was up 0.11% at 154.44. The yen's plunge to its lowest level since 1990 has significantly increased the likelihood of intervention by the Japanese authorities.
Despite verbal warnings of Japanese intervention at the end of March 2024, Simpson believes a test of 155 is realistic given current market conditions.
EUR/USD and GBP/USD fell 0.04% and 0.02% to 1.0619 and 1.2442, respectively.
USD/CNY rose 0.02% to 7.2396, but gains were limited by China's latest first-quarter GDP data, which beat economists' expectations.
AUD/USD and NZD/USD fell 0.29% and 0.20% to 0.6422 and 0.5891, respectively.
Read also: Crypto market showed another decline