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Dollar holds steady as retail sales miss and Fed hike odds fall
CME FedWatch shows only a 30.6% probability of a rate hike next month, down from 52.2% a week earlier, after July Retail Sales fell 0.6% month over month.
US stock futures traded mixed as markets repriced Federal Reserve expectations following weaker US data, which also helped keep the US dollar from facing immediate downside pressure, FXStreet said. The US Census Bureau reported July Retail Sales fell 0.6% month over month, reversing June’s 0.2% gain and missing expectations for a 0.1% increase. On an annual basis, retail sales rose 5.0% in July, slowing from 6.8% the prior month.
Traders scaled back near-term rate hike expectations, with the CME FedWatch tool pricing in a 30.6% chance of a hike next month, down from 52.2% a week earlier. FXStreet also pointed to a softer-than-usual tone from Fed Governor Goolsbee, where a 4.6/10 FXS Speechtracker score came in below the 6.8/10 historical average, suggesting a more dovish tilt.
FXStreet added that markets are looking for cues on consumer health and policy guidance, with major US retailer earnings scheduled, including Home Depot on Tuesday, Lowe’s on Wednesday, and Walmart on Thursday. Investors will also monitor the Federal Reserve’s latest meeting minutes due on Wednesday.