Weaker US retail sales and consumer sentiment data drive dollar losses, reducing expectations for Fed rate hikes in 2026.
The US Dollar Index extended its decline to 99.43, down 0.2% on Monday, following softer-than-expected economic data. July retail sales contracted 0.6% month-over-month, missing forecasts of a 0.1% gain, while the University of Michigan’s Consumer Sentiment Index dropped to 51 in August from 55.2 in July.
The dollar’s pullback follows a week of losses against major currencies, with the Australian Dollar leading gains. Markets are reassessing Federal Reserve policy, as weaker data reduces expectations for rate hikes in 2026. Analysts suggest further inflation progress could solidify views against additional tightening.
No high-impact US data releases are scheduled for Monday, leaving focus on Canada’s July CPI report later in the day.