Strong US retail sales data helped to lift the dollar to a 16-month high on Tuesday, driving down emerging market currencies, including the Turkish lira which fell to a record low.
US retail sales rose 1.7 per cent in October from the previous month, a larger gain than economists had expected. The October data indicated shoppers were accepting higher inflation, but raised questions about how long the Federal Reserve could hold US interest rates at record lows.
Higher rates are generally seen as a boon to the dollar, increasing its attractiveness against other currencies. And the move on Tuesday suggested that traders were betting that strong consumer demand could add to the inflationary pressures that may force the US central bank to raise rates sooner than expected.