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Dollar slips as weak retail sales and sentiment cut odds of a Fed hike

The DXY fell 0.27% on Friday, with markets pricing a 32% chance of a 25 bp Fed rate hike in September 15-16, down from 35% the prior day.

Sunday, August 16, 2026 · Written up by our desk · Major Pairs

The dollar index, DXY00, fell 0.27% on Friday after weaker US retail sales and consumer sentiment reduced expectations for a September Federal Reserve rate hike, according to Yahoo Finance. Yahoo Finance reported that July retail sales fell 0.6% month over month versus expectations of a 0.1% increase, and that ex autos and gas retail sales declined 0.2% versus a forecast gain of 0.3%. The report also pointed to the University of Michigan's preliminary August consumer sentiment index dropping 4.2 points to 51.0, weaker than expectations for only a small decline to 55.0.

Despite the softer economic data, the dollar's decline was limited by a rise in the 10-year T-note yield, up 5 basis points, tied to lingering inflation concerns. The article also said safe-haven demand eased after President Trump appeared to pause plans for a major new military attack on Iran, favoring economic pressure instead.

In currency trading, EUR/USD rose 0.34% on the dollar's weakness, the report said, supported by interest-rate differentials. Markets were described as pricing a 32% chance of a +25 bp Fed hike and a 92% chance of a +25 bp ECB rate hike at the next meetings.

Latest closeEUR/USD 1.122 ▼0.3%|Dollar index 102.12 ▼0.1%

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