US Dollar Hits Three-Month Low Amid Rate Hike Doubts

The U.S. dollar dropped to its lowest level in three months following a series of soft economic data releases that lowered investor expectations for Federal Reserve interest-rate increases. A 0.6 percent month-on-month decline in July retail sales and lower-than-expected producer price inflation contributed to the slide. By August 14, the market probability for a September rate hike fell to 33 percent, down from over 52 percent earlier that week.

While the dollar weakened against the euro, British pound, and Australian dollar, it rallied against the Japanese yen, Swiss franc, and Swedish krona. The Bureau of Labor Statistics reported that headline annual inflation declined to 3.4 percent, further influencing market sentiment.

Traders are now looking toward the release of FOMC minutes and a scheduled appearance by Federal Reserve Chairman Jerome Powell at the annual Jackson Hole symposium later this month for definitive policy guidance.