Dollar Falls as Retail Sales Slump in July

The US dollar fell on Friday after data showed an unexpected decline in retail sales for July. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, dropped by 0.25 percent to 99.67.

Retail sales decreased by 0.6 percent last month, following a 0.2 percent gain in June. Economists had forecast a 0.1 percent increase. This decline has sparked concerns about an economic slowdown in the US.

Monex USA director of trading Juan Perez said 'We are clearly having signs of poor consumption.' The drop in retail sales, combined with softer-than-expected consumer and producer price inflation data this week, has tempered expectations that the Federal Reserve will raise rates at its September 15-16 meeting. Traders now predict a 31 percent chance of a rate increase in September, but a 69 percent probability by December.

The euro and sterling strengthened as a result, with the euro rising to $1.1564, its highest since June 17, and sterling reaching $1.3561, its highest since May 12.