Dollar edges lower after poor data signal rate hike delay

[NEW YORK] The dollar fell slightly on Tuesday after disappointing data on American consumer spending suggested the Federal Reserve may delay an interest rate hike.

US retail sales fell broadly in June, by 0.3 per cent, the Commerce Department reported, instead of the 0.3 per cent increase expected by analysts.

"The dollar slipped anew after data showed American consumers unexpectedly turned fragile last month, clouding forecasts for a solid second-quarter rebound," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

The weak report came on the eve of Federal Reserve Chair Janet Yellen's twice-yearly testimony to Congress on monetary policy and the state of the world's largest economy.

Investors are expected to scour Ms Yellen's remarks, to the House of Representatives Financial Services Committee on Tuesday, for insight into the Fed's thinking on its plan to raise its zero-level federal funds rate this year.

In recent months some analysts have pushed the expectations for a hike from September to December, and beyond.

"Any signs of slower growth could easily dissuade the Fed from hiking interest rates later this year, pushing the first rate rise into 2016," said Chris Williamson, chief economist at Markit.

The euro, meanwhile, held relatively steady as traders awaited the Greek parliament's decision on tough bailout terms demanded by the other 18 eurozone countries.

Under the deal struck on Monday, the parliament must approve the reforms by Wednesday for negotiations to proceed on a crucial three-year bailout deal to save the country from default.

AFP