Dollar Slumps on Surprise Retail Sales Decline and Soft Inflation
The US dollar fell on Friday after data showed an unexpected decline in retail sales for July. The drop of 0.6 percent followed a 0.2 percent gain in June, contrary to economists' expectations of a 0.1 percent increase.
According to Juan Perez, director of trading at Monex USA in Washington, the evidence indicates an economic slowdown in the United States. He pointed out that signs of poor consumption are clearly visible in the data.
The soft retail sales numbers combined with lower-than-expected consumer and producer price inflation have reduced expectations for a Federal Reserve rate hike at its September 15-16 meeting. Traders now predict only a 31 percent probability of a September increase, alongside a 64 percent chance of a December rate hike.
The dollar index fell 0.33 percent to 99.59, with the euro up 0.36 percent at USD1.1568 and the Japanese yen strengthening 0.32 percent against the greenback to 158.97 per dollar.