US Retail Sales Weaken Case for Fed Rate Hike in September

The US economy's softer data release in July has strengthened the case against a Federal Reserve rate hike in September, with just 7 basis points of hikes now priced at that meeting.

The retail sales data for July was weaker than expected, adding to the evidence against a rate increase. Investors are taking advantage of this scenario by targeting long carry trade and commodity stories, which has led to a shift away from the Japanese yen and Swiss franc.

Looking at the US economic calendar for this week, there isn't much that could change the current market sentiment. The highlight will be the release of the minutes from the 29 July FOMC meeting on Wednesday evening, where a 9-3 vote for unchanged rates was recorded and a confusing press conference followed.

The DXY index is currently trading at the lower end of its 99.40-100.00 range and may continue to do so this week as investors focus on higher-yielding currencies.