Dollar Weakens Amid Soft US Data and Reduced Rate Hike Bets
The dollar weakened against major currencies on Monday as traders trimmed rate hike bets in response to softer US economic data.
Data released last week showed a decline in US retail sales, adding to unexpected job losses and mild inflation readings. This led traders to reprice expectations for the Federal Reserve's interest rate policy, with just 30.6% chance of a rate increase at the September meeting, down from 52.2% a week ago.
'We had a series of softer numbers in the US, with payrolls and retail sales coming out soft,' said Kit Juckes, chief FX strategist at Societe Generale. 'That's going to reprice expectations to some degree about how much the Fed is going to tighten policy.'
The euro hit a two-month high against the dollar at around $1.1578 as traders trimmed rate hike bets.