Dollar rose with the increase in expectations of raising interest rates

The dollar rose on Monday and hit a one-month high against the yen after strong US retail sales and impressive earnings from Wall Street banks increased market expectations that the Federal Reserve will raise interest rates in May.

Data released on Friday showed that so-called core retail sales, which exclude autos, gasoline, building materials and food services, fell just 0.3 percent last month despite a larger-than-expected drop in US retail sales in March.

Profits at JPMorgan Chase, Citigroup and Wells Fargo came in better than expected in the first quarter of 2023, overcoming fears of a banking crisis that emerged in March.

The dollar rose to a one-month high of 134.22 yen as the Japanese currency came under pressure as the Bank of Japan stuck to its stance on interest rates.

Meanwhile, the dollar index settled at 101.65 points, staying away from the one-year low it recorded on Friday at 100.78 points.

On Friday, the index recorded a loss for the fifth consecutive week, after recent indications of declining inflation in the United States raised expectations that the Federal Reserve would not be forced to raise interest rates as much as expected.

The euro fell slightly to $1.0986, and the pound fell 0.02 percent to $1.2412.

Financial markets now expect about 81 percent of the Federal Reserve to raise interest rates by 25 basis points next month, up from a forecast of 69 percent last week.

US Treasury yields remained elevated on Monday, holding onto most of Friday’s gains.

The Australian dollar rose 0.01% to $0.67095, while the New Zealand dollar fell 0.19 to $0.61985.

The offshore yuan fell nearly 0.1 percent to $6.8786.