Dollar Slumps on Weakened US Retail Sales and Consumer Sentiment

The US dollar index (DXY) declined by -0.27% on Friday due to weak US retail sales and consumer sentiment reports.

The data released showed that July's month-on-month retail sales fell -0.6%, much weaker than market expectations of +0.1%. Ex-autos and gas, July retail sales fell -0.2%, also weaker than expectations.

The University of Michigan's preliminary August US consumer sentiment index dropped by -4.2 points to 51.0, a decline from July's 55.2. The weak reports reduced the odds of a September Fed rate hike to 32% from 35% on Thursday.

Despite the dollar's decline, its weakness was curbed by a rise in the 10-year T-note yield of +5 basis points (bp), driven by inflation concerns. The Treasury Secretary stated that the administration will soon announce unprecedented economic measures against Iran, reducing safe-haven demand for the dollar.