US dollar index nears two-month low on data

The US dollar index fell past 99.6 on Friday, approaching the two-month low of 95.53 on August 7th as the latest economic data limited positions on a Federal Reserve rate hike.

The retail sales control group unexpectedly dropped in July, challenging the view of sharp resilience from US consumers, even though volatile seasonal effects distort the reading.

The results were released after both producer and consumer inflation softened in the period, seemingly pausing the urgency for the Fed to deliver a rate hike in their September meeting.

Still, foreign funds remained relatively underweight on long-dated US Treasury bonds compared to earlier this year on concerns that high price indices and Fed complacency on inflation raised could lift inflation in the longer term.

With the pressure on the currency, the DXY hovered close to its bottom after the US Treasury completed its joint intervention on the foreign exchange market with Tokyo to support the yen.