Investing.com – The dollar rose to a new high for the year against its rivals supported by a strong wave of buying on the back of surging bond yields and economic data pointing to underlying strength in the U.S. economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.43% to 92.95. The greenback hit a fresh high for the year of 93.35.
The Commerce Department said on Wednesday that retail sales fell 0.3% last month . That missed economists’ forecast for a 0.5% rise but retail sales for March were revised higher to 0.4%.
The retail sales control group – which has a larger impact on U.S. GDP – rose 0.4% meeting economists’ estimates.
Market participants said the upward revision to March retail sales bodes well for U.S. economic growth as it confirmed expectations that weakness seen in first-quarter consumer spending was temporary.
“Overall, these are solid figures, particularly given the upward revision to March, which supports our forecast that consumer spending is accelerating again in the second quarter after a sluggish first quarter,” CIBC said.
The Empire State manufacturing index rose in May, to a reading of 20.1 from 15.8 in April, the New York Fed said Tuesday.
The upbeat outlook on economic growth lifted U.S. bond yields as the 10-year Treasury yield rose to its highest level since July 11, adding to upside momentum in the greenback.
The dollar’s surge higher was also supported by a slump in both the pound and the euro.
EUR/USD fell 0.57% to $1.1860 after German GDP fell short of economist forecasts, while GBP/USD fell 0.32% to $1.3513 following a mixed U.K. labor market report.
USD/JPY rose 0.66% to Y110.32 ahead of the Japan GDP data due Wednesday overnight.
USD/CAD rose 0.52% to C$1.2873 as subdued oil prices underpinned a move higher in the pair.