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Dollar slips vs euro as traders trim Fed rate hike odds
The euro rose to a two-month high near $1.1583, while FedWatch showed September hike odds fell to 30.6% from 52.2% a week earlier.
The dollar fell against the euro on Monday as traders reduced expectations for Federal Reserve rate hikes after softer US economic data, according to Reuters. The move reflects growing concern that recent underwhelming releases could change how aggressively the Fed responds to the economy.
Reuters cited US data showing retail sales fell in July for the first time in nine months, alongside unexpected job losses reported earlier and mild inflation readings. Societe Generale FX strategist Kit Juckes said the softer numbers are repricing expectations for how much the Fed will tighten policy, which is weighing on the dollar.
Markets now price a 30.6% chance of a Fed rate increase at the September meeting, down from 52.2% a week earlier, according to CME FedWatch. Traders are also looking ahead to the Fed's Jackson Hole symposium next week for clues on policymakers' interpretation of the latest data.
In related currency trading, the yen firmed slightly, continuing to recoup losses after historic intervention. Reuters said the yen was up 0.01% to about 159.36 per dollar, and that US and Japanese efforts to stabilize the currency left currency markets focused on whether the Bank of Japan will raise rates soon.