Weaker-than-expected US retail sales and consumer sentiment data reduce odds of a September Fed rate increase to 30%.
EUR/USD climbed to 1.1580, its highest level since June 17, as the US Dollar Index (DXY) fell 0.47% to 99.50. The move follows disappointing US economic data, including a 0.6% drop in July retail sales versus expectations of a 0.1% gain.
The University of Michigan’s Consumer Sentiment Index fell to 51.0 in August from 55.2, while inflation expectations edged up to 4.3%. Earlier CPI and PPI reports showed easing price pressures, reinforcing expectations that the Fed may pause rate hikes in September.
Markets now assign a 70% probability to unchanged rates next month, up from earlier bets on a hike. Oil price volatility persists due to geopolitical risks, keeping inflation concerns alive.