Dollar dropped on China’s better-than-expected growth forecast

The dollar retreated against major currencies after better-than-expected growth figures from China. British payrolls supported the pound.

China’s gross domestic product advanced 4.52% in the first three months of the year, beating analysts’ expectations of a 4% expansion as it ranked second in the world after the end of COVID-19 restrictions.

Separate reports on March activity showed retail sales accelerated to 10.62%, beating expectations and hitting a nearly two-year peak, while factory output growth also accelerated but came in below expectations.

The euro was last up 0.39% against the dollar at $1.0968 after two consecutive daily retreats of more than 0.52%.

The dollar index, which measures the currency against a basket of other currencies, retreated 0.37% to 101.73, up more than 1% in the last two trading sessions.

China’s offshore yuan was higher at 6.8792 per dollar.

The British pound jumped despite a surprise rise in the unemployment number in the three months to February as wage growth remained higher than expected, which could prompt the Bank of England to raise interest rates next month.

The pound was recently up 0.48% against the dollar at $1.2434.

In the United States, reports showed that confidence improved for the fourth consecutive month in April while manufacturing activity in New York state rose for the first time in five months.

Markets are pricing in about a 90% chance that the Fed will raise interest rates by 25 basis points at its next meeting, while traders are still expecting a rate cut by the end of this year.