US dollar, Treasury yields trade higher on strong Retail Sales

Key points

• US Retail Sales printed higher than expected at 0.7%
• USD/JPY traded well above 154.00 after Retail Sales - highest level since 1990
• 10YR Treasury yields hit 4.6%
• 2YR Treasury yields near 5.0%
• CME FedWatch tool predicting a 12.2% chance of no interest rate cuts in 2024

US Retail Sales - 0.7% - higher than expected

March's US Retail Sales outperformed expectations, registering a 0.7% month-over-month increase against the anticipated 0.3%. This significant uptick indicates robust consumer spending, reflecting a potentially stronger economic outlook. This release, along with strong CPI and Nonfarm Payroll data, confirms a thriving March for the US economy - all amid 5% interest rates.

US dollar continues higher on strong US data

Following the release of the strong Retail Sales figures, the USD/JPY currency pair surged well above 154.00, reaching its highest level since the 1990s. The US dollar's ascension is a direct reflection of positive economic indicators, especially prevalent against a Japanese yen boasting 0% interest rates.

USD/JPY price history

10YR Treasury yields hit 4.6%

The yield on US 10-Year Treasuries has climbed to 4.6%, a significant rise from below 4.0% at the beginning of the year. This increase, fueled by strong US data, suggests growing investor confidence in the economy, impacting forex trading as higher yields often strengthen the currency.

2YR Treasury yields near 5.0%

Short-term US interest rates, particularly the 2-Year Treasury yield, are now nearing 5.0%. This rally, suggesting expectations of fewer rate cuts by the Federal Reserve, reflects market perceptions of continued economic strength and inflation concerns.

Could the Fed hike interest rates again?

With Fed Funds futures from the CME now showing a 12.2% probability of unchanged interest rates in 2024, speculation grows about the Federal Reserve's next moves. While rate cuts have been the expectation since last fall, could another hike be on the table with continued US outperformance? Such possibilities have widespread implications for forex traders, who must consider potential rate hikes in their strategic planning.

How to trade US dollar

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.