The Dollar held close to a 16-month high against the Euro on Tuesday ahead of U.S. retail sales data, whilst the Yuan reached a five-month high in Asia trading following talks between the U.S. and Chinese presidents.

Chinese President Xi Jinping referred to U.S. President Biden as an “old friend”, adding both nations need to boost communication and cooperation.

Support for riskier currencies waned however as the ongoing talks highlighted the differences that remain between both leaders, yet the Yuan remained supported at 6.3728 per Dollar.

In addition, the Euro stood at $1.1377, lacking major support until around the $1.12 mark, impacted by Covid outbreaks in Europe and ongoing rhetoric from the central bank chief that she won’t be rushed into raising rates.

There were modest gains for the Australian and New Zealand Dollars, but these were retraced as traders eyed on U.S. retail sales data. The Yen held steady at 114.15 per Dollar whilst the Australian Dollar was flat at $0.7344, and the New Zealand Dollar was steady at $0.7035. The Pound Sterling stood at $1.3419.

“U.S. retail sales today is the big watch to gauge if demand is resilient amid inflation,” according to Vishnu Varathan, head of economics at Mizuho Bank in Singapore. If this is the case, this could mean further pressure on the Federal Reserve to increase rates sooner.

Moves also remain minor in Asia trading because of rumours President Biden may soon unveil his choice for Federal Reserve chair – Jerome Powell’s reappointment or a promotion for Fed Governor Lael Brainard, Reuters reports.

“If Powell is chosen, we expect no impact on the Dollar. But if Brainard is chosen, we expect a short-term fall in U.S. interest rates and the Dollar because it is widely believed a Brainard-led FOMC would be more dovish than otherwise,” said Commonwealth Bank of Australia analyst Carol Kong.