US dollar index near two-month lows as Fed hike bets fade
The dollar index traded around 99.5 on Tuesday near two-month lows as traders scaled back expectations for a Federal Reserve rate hike this year after weak US retail sales, consumer sentiment, and subdued inflation.
The dollar index traded around 99.5 on Tuesday, hovering near two-month lows as traders scaled back expectations for a Federal Reserve interest rate hike this year following a run of weak US economic data.
Data released last week showed US retail sales and consumer sentiment declined, while inflation readings remained subdued.
Markets now expect the Fed to hold policy steady in September and are no longer fully pricing in a rate increase by year-end, unlike just a week ago.
Investors are also looking ahead to the minutes of the Fed’s July meeting and Chairman Kevin Warsh’s remarks at the annual Jackson Hole symposium for further clues on the policy outlook.
Meanwhile, traders remained wary of inflation risks as prospects for a new agreement between the US and Iran dimmed after President Donald Trump said he was not interested in extending the interim peace deal.