Dollar Falls Against Euro as Traders Reprice Rate Hike Bets

The US dollar has fallen against the euro as traders reassess rate hike bets following softer-than-expected economic data. The dollar index, which measures the greenback against a basket of other major currencies, fell to its lowest since early June and was last down 0.1% at 9.59.

Recent underwhelming data, including a decline in US retail sales for the first time in nine months, has led traders to reprice expectations about how much the Federal Reserve will tighten policy. According to Kit Juckes, chief FX strategist at Societe Generale, 'We had a series of softer numbers in the US, with payrolls and retail sales coming out soft. That's going to reprice expectations to some degree about how much the Fed is going to tighten policy.'

As a result, markets are now expecting just a 30.6% chance of a rate increase at the Fed's September meeting, down from 52.2% last week.

The euro has hit a two-month high and was last up 0.1% at around $1.1577 on the day, while the yen firmed a fraction after recent intervention by the US and Japanese authorities to stem its slide.