US Dollar Momentum Slows Amid Downbeat Economic Data

The US dollar's momentum indicators have taken a hit due to downward data surprises. In July, the US lost jobs and saw softer inflation gauges. Additionally, retail sales declined unexpectedly in July. As a result, the derivatives market has downgraded its chances of a rate hike at next month's FOMC meeting.

The Fed funds futures have seen a significant decrease in tightening expectations. At the end of last week, only 7.8 basis points of tightening were discounted for next month, compared to 18 basis points at the end of July.