Dollar Falls to Post-Brexit Low as Economic Data Curb Fed Bets

How Central Banks Monetary Policies Impact Markets
  • Greenback sinks on sluggish retail sales and producer prices
  • Declines to weakest since June 24, day after U.K. vote

The dollar dropped to the lowest since June after weaker-than-forecast U.S. economic reports led traders to trim bets that the Federal Reserve will raise interest rates in coming months.

The greenback fell against the euro and the yen after retail sales unexpectedly stalled last month while wholesale prices showed a surprise decline. Traders now see about a 42 percent chance that policy makers will lift rates this year, down from closer to 50 percent earlier this week.

This marks the third straight week in which currency traders have been buffeted by conflicting messages on the economy. The dollar tumbled July 29 as a reading on second-quarter gross domestic product proved much weaker than forecast. Then a week ago, rate-hike wagers were revived as July jobs data trounced expectations. Now the latest figures leave greenback bears ascendant again.

"Two weeks ago, we had GDP and we thought ‘lights out’ -- and then we had the payrolls, and the lights turned back on again, and now it’s lights out again," Steven Englander, global head of Group-of-10 currency strategy at Citigroup Inc. in New York, said in a Bloomberg Television interview.

The Bloomberg Dollar Spot Index, which tracks the currency against a group of major peers, dropped about 0.1 percent as of 5 p.m. in New York. It reached the lowest since June 24, when financial markets were in turmoil after the U.K. vote to leave the European Union. The index is down 4.5 percent this year.

The greenback lost 0.2 percent Friday to $1.1162 per euro and sank 0.7 percent to 101.30 yen.

After all the mixed signals, traders are left waiting for Fed Chair Janet Yellen’s comments later this month at a meeting of global policy makers in Jackson Hole, Wyoming. The Fed releases its next policy decision on Sept. 21.

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