Weaker-than-expected China economic data and rising US Treasury yields drive demand for the dollar amid growth divergence.
The dollar gained ground as China’s April economic data fell short of expectations, reinforcing concerns over global growth divergence. Industrial output rose just 4.1% year-on-year, while retail sales increased only 0.2%, and fixed-asset investment contracted unexpectedly over the January-April period.
Analysts had anticipated stronger figures, following a mixed recovery in prior months. The weak data contrasted with rising US Treasury yields, which climbed on expectations of sustained Federal Reserve policy tightening. This dynamic bolstered the dollar’s appeal as a carry trade currency.
Markets reacted by pushing the dollar index higher, while Asian equities and commodities faced downward pressure.