Dollar Index Breaks Lower After Weak Consumer Data
The Dollar Index held its range through a July payroll contraction on August 7, a cooler CPI print on August 12 and a flat PPI reading on August 13, but broke lower after weaker consumer data. July retail sales fell 0.6% versus a 0.1% consensus gain, while preliminary August consumer sentiment was 51 against 54.5 expected. The index opened just under 100.00, then slipped through 99.50. Beneath the surface, sales ex-autos dropped 0.3% versus a 0.2% consensus and the control group moved to -0.4% from a 0.4% rise the prior month; futures now imply about a 31% chance of a September hike, down from near even odds a week earlier, and a December move is priced near 64%. The two-year yield briefly traded below 4.10%, its lowest since June 30.
Policy Actions and Upcoming Economic Data
Support has also been shaped by policy rather than price discovery, after Tokyo bought yen in record single-session size in early August and followed with a second tranche coordinated with the US Treasury; the yen is still set for a weekly fall of roughly 0.7%, near 159.00 per dollar, after trading close to 164.00 before July’s operation. Brent is near $87.00 and the Strait of Hormuz remains shut, yet the dollar weakened. Next week brings FOMC minutes on Wednesday at 18:00 GMT; Tuesday prints include housing starts and permits, with priors of 1.427m and 1.374m, plus industrial production at a 0.3% consensus, while Friday’s preliminary PMI readings follow 53.9 manufacturing and 54.6 services priors. Technically, 100.00 is capped by the 50-day EMA near 100.25, while 99.50 and the 200-day EMA near 99.60 sit below; a close under that band puts 99.00 and 98.50 in view, with 97.60 as the spring low, and Stoch RSI sits near 14.
