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Dollar slides after U.S. retail sales unexpectedly fall in July

The dollar index fell 0.25% to 99.67, while traders cut expectations for a September Fed hike to a 31% probability.

Reported · Written up by our desk · Major Pairs

The U.S. dollar fell on Friday after data showed retail sales unexpectedly declined in July, a shift that prompted currency traders to reassess Federal Reserve policy expectations. Retail sales dropped 0.6% last month, compared with a 0.2% gain in June, and economists had forecast only a 0.1% rise, according to LiveMint Markets, citing Reuters polled forecasts.

The weaker consumption signal also fed into broader concerns about economic slowdown and the labor market. Softer inflation readings earlier this week had already tempered expectations for a September rate increase, and traders were pricing in just a 31% probability of a hike at the September 15-16 meeting, alongside a 69% chance of a rate increase by December.

Movements extended to major currencies, with sterling strengthening 0.33% to $1.353, after hitting $1.3561, its highest level since May 12. The Japanese yen also edged higher, strengthening 0.08% to 159.37 per dollar, even as it was on track for about a 1% weekly decline as the effects of recent U.S. and Japanese intervention faded, LiveMint Markets reported, citing Reuters.

Oil prices rose alongside attention to the U.S. conflict with Iran and efforts to open the Strait of Hormuz. LiveMint Markets said crude climbed on renewed attacks on tankers and a war of words between the Trump administration and Iran's leadership.

Latest closeWTI crude $82.40 ▲1.4%

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