Dollar Falls as US Retail Sales Drop, Japan Rate Hikes Seen
The US consumer may have finally taken a breather, as retail sales figures showed their first decline in nine months. This unexpected dip has market participants reevaluating the likelihood of a Federal Reserve rate hike, with some now betting on a hold. The dollar fell broadly across Asia on Monday, while the Aussie and kiwi currencies reached two-month highs.
The yen, however, rose slightly as investors increasingly expect Japan's policymakers to pick up the pace of rate hikes. Bank of America analysts believe there will be four hikes between September and July next year, taking the policy rate to 2%. Markets largely shrugged off a missed economic growth target in Japan on Monday.
The benchmark 10-year Japanese government bond yield has been sold for six consecutive sessions, reaching an almost 30-year high of 2.925%. The yen traded near its strongest level against the dollar since May.