Dollar edges lower against euro as markets trim US rate hike bets

The dollar slipped against the euro and Swiss franc on Monday, as traders reduced expectations of a Federal Reserve rate hike following disappointing US economic data. The euro reached a two-month peak at around US$1.1578, up 0.08% on the day. The euro's strength was attributed to a series of weaker economic indicators in the US, such as falling retail sales last week and underwhelming job losses in July.

Analyst Kit Juckes of Societe Generale suggested that the market's reaction to these soft numbers could be driving the dollar's decline. The CME FedWatch tool now indicates only a 30.6% probability of a rate increase at the Fed's September meeting, down from 52.2% a week earlier. Market participants are also preparing for the upcoming Fed Jackson Hole symposium, where policymakers will provide insights on their interpretation of recent economic data.

The yen weakened slightly against the dollar and Swiss franc, while China's industrial output growth and retail sales both fell below expectations in July, as reported by market data.