Dollar Hits Two-Month Lows as Markets Reduce Fed Rate Hike Bets

The global stock market saw a slight increase on Monday, while the dollar slipped to two-month lows. The benchmark STOXX index of 600 big European companies rose by 0.21%, following earlier gains in Asia-Pacific shares outside Japan, which increased by 0.5%. Japan's Nikkei also edged higher by 0.3%.

Chinese blue-chip stocks rose by 0.8% and the Hang Seng index gained 1.6% ahead of China's activity data for July. However, forecasts are centered on a slowdown in industrial output growth to 4.8%, from 5.3% previously.

The soft run of U.S. economic data, including an unexpected drop in retail sales, has led markets to reduce bets for an imminent rate hike from the Federal Reserve. A hike next month is now priced at 30%, down sharply from about 50% a week earlier, according to the CME Group's FedWatch tool.

U.S. Treasury yields slipped after finishing mixed last week, with the two-year yield easing by 2 basis points to 4.154%. The ten-year yield also fell by 2 basis points to 4.680%.