Dollar Falls on Weak Retail Sales and Iran Deal

US retail sales came in lower than expected pushing the US Dollar lower and Treasury rates higher. That an Iran deal has dampened hopes for inflation which might cause the Federal Reserve to put a rate hike on hold.

The 10 year Treasury note fell off 6 basis points to come in at 2.40 percent, at the time of this report. The FXCM Dollar Index also fell lower. Crude oil was little changed even though energy producers had a poor day on the Stoxx Europe 600 Index. We have also seen a drop in the Ruble and the Sterling has reached a one week high after Mark Carney, chair of the Bank of England (BOE) said the time for a rate increase was moving closer. Earlier in the trading day, China’s stock markets ended a three day rally.

Iran and the world powers have signed a deal to curb the Islamic Republic’s nuclear program in return for the end of sanctions. There is no time table on that as of yet. Just now, US retail sales dropped -0.6 percent lower than analyst expectations. This has dampened investor sentiment over the strength of the US economic recovery.

News about the Iranian deal could cause a stir in the oil market as they could continue to flood the market with crude. This market is already highly oversupplied and has caused a drop in the price of the black gold. Still, there are many unknowns here and the market has not yet reacted as a swift comeback in Iranian exports might not be a sure thing.

The groundbreaking accord reached with Iran will end a 12 year standoff over their nuclear activities and program. It also draws down the threat of a US military action. Still, Israel remains very much a wildcard as they think this deal will enable the Islamic republic to go to nuclear threshold and threaten not only Israel but the rest of the Middle East. There is also a problem with US lawmakers who can still reject the deal.