Dollar edges lower as Fed hike bets recede

The dollar index fell to around 99.5 on Monday, declining for a third straight session as cooling US economic data prompted traders to scale back expectations for an imminent Federal Reserve interest rate hike.

Data released last week pointed to subdued US inflation, while consumer sentiment and retail sales weakened.

Markets now see roughly a 67% probability that the Fed will hold rates in September, up from a below 50% chance priced in a month before.

Investors are now awaiting the FOMC’s latest meeting minutes and Fed Chair Kevin Warsh’s speech at the Jackson Hole symposium for further guidance.

Traders will also monitor the Empire State Manufacturing Index and NAHB Housing Market Index due later today.

The dollar weakened broadly, falling the most against the Australian and New Zealand dollars, as well as the British pound.