Dollar Slips to 99.52 as Soft US Data Cools Fed Hike Bets

The dollar index closed Friday, August 14, at 99.5160, down 0.29% over the same session. The pullback tracked a weak run of US data: July retail sales fell 0.6% m/m (control group -0.4%), well below the +0.1% forecast, and July CPI ran at 3.4% y/y with core at 2.5% y/y. Both cooled bets that the Fed would hike. Treasury yields firmed regardless - the 10Y added 5.5bp to 4.696%, the 5Y rose 4.9bp to 4.362%, the 30Y climbed 5.2bp to 5.265%, while the 3M eased 0.8bp to 3.697%. Risk appetite stayed calm: the VIX fell 3.42% to 15.25, gold rose 0.57% to 4375.77, the S&P 500 slipped 0.29% and the Nasdaq added 0.53%.

The Fed funds target sits at 3.50-3.75%, and the live 2026 policy debate is whether the Fed hikes further, not whether it cuts. Friday's soft US retail sales and CPI prints pushed against the hike case: desk commentary on both GBP and CAD described the data as reinforcing bets the Fed holds rates in September, and the day's headlines included Wall Street gains as Fed rate hike worries ease (CommBank) and Gold price regains momentum as Fed rate hike fears recede (Mining.com.au). The move wasn't uniform across the curve, though - the 10Y, 5Y and 30Y each firmed by roughly 5bp on the day even as the front-end 3M slipped 0.8bp, a split worth noting rather than reading as one clean direction.

EUR/USD: 1.1570 (+0.36%), a two-month-plus high, after confirmed eurozone Q2 GDP of +0.4% q/q and soft US CPI cooled Fed hike bets. GBP/USD: 1.3533 (+0.34%), up from 1.34865 and briefly touching a three-month high near 1.3561, driven by broad dollar weakness after weak US retail sales. USD/JPY: 159.31 (-0.12%), pulling back from near 160 after Reuters reported the BOJ could hike its 1.00% rate as soon as September; still down about 1% for the week. USD/CAD: 1.3874 (-0.41%), a fresh two-month low, as strong Canadian factory sales and GDP data plus US-Canada trade-deal hopes ahead of the August 19 tariff deadline supported the loonie.

EUR/USD closed Friday at 1.1570, up 0.36% and at its highest level since June 2026. Two things converged: Eurostat confirmed euro-area Q2 GDP at +0.4% q/q, matching the July 30 flash and reinforcing growth resilience, while softer US data - July CPI at 3.4% y/y, core 2.5% y/y, plus the 0.6% drop in retail sales - cooled bets on further Fed tightening. This built on euro firmness running back through August 10-14, tied partly to shifting US-Iran/Middle East headlines. On policy, the ECB held rates at its July 23 meeting (deposit 2.25%, main refinancing 2.40%, marginal lending 2.65%); President Christine Lagarde said the hold should not be read as the end of tightening, citing Middle East-driven energy risk. Markets are closed for the weekend; the next session opens Monday, August 17, with no major eurozone data due until Tuesday's ZEW survey.

The economic calendar tool returned no scheduled events for today, and flagged its data source may be delayed - so this preview draws on desk notes rather than a live calendar pull. Markets are closed for the weekend; the next session opens Monday, August 17. The CAD desk points to Statistics Canada's July CPI the same day, where RBC Economics forecasts headline inflation rising to 2.9% y/y from 2.8%. No major eurozone-specific data is scheduled Monday. Later in the week: German/eurozone ZEW sentiment Tuesday, July FOMC minutes Wednesday, and flash HCOB/S&P Global PMIs for Germany and the eurozone on Friday.