U.S. retail sales unexpectedly fell in July, intensifying market concerns about an economic slowdown and rapidly cooling expectations for a September Federal Reserve rate hike, while the dollar remained under sustained pressure. Simultaneously, sentiment in AI trading has shown signs of recovery, leading to a mixed performance in pre-market U.S. equities, with Nasdaq futures moving higher.

On Monday, U.S. stock index futures were mixed, with Dow Jones futures down 0.13% and Nasdaq 100 futures up 0.5%. In pre-market trading, memory chip stocks posted broad gains, with SanDisk rising about 6%, SK Hynix gaining roughly 4%, Seagate Technology advancing about 3%, Western Digital climbing 4%, and Micron Technology adding approximately 3%.

The U.S. dollar index declined for a third consecutive session, approaching levels not seen since May. July's U.S. retail sales recorded their largest monthly drop in over a year, pushing market expectations for a September Fed rate hike to below 30%. Meanwhile, continued pressure on the Federal Reserve from President Trump has further eroded confidence in the dollar's safe-haven status.

On the geopolitical front, the situation in the Middle East has not shown signs of further escalation, though risks remain present. According to reports from CCTV International News, in response to President Trump's recent comment that "after defeating Iran, we will very soon declare the Strait of Hormuz as U.S. territory," the Commander-in-Chief of the Iranian Armed Forces, General Hatami, stated on August 16 during a public event that even if made as a joke, such a remark is a grave mistake. Hatami also stated firmly, "This is Iran, and its guardians will break the legs of any aggressor." Oil prices edged lower, with WTI crude falling 0.6%.

Kyle Rodda, a senior analyst at Capital.com, remarked, "The biggest headwind facing the market remains geopolitical uncertainty, which continues to weigh on market sentiment. However, the relatively limited military activity in the Middle East recently has also helped to reduce market volatility to some extent."

Key market movements are as follows:

U.S. stock index futures were mixed, with Dow futures down 0.13%, S&P 500 futures up 0.1%, and Nasdaq 100 futures up 0.4%.

The Euro Stoxx 50 index opened 0.3% higher, Germany's DAX rose 0.2%, the UK's FTSE 100 gained 0.3%, and France's CAC 40 edged up 0.04%.

Japan's Nikkei 225 index closed 0.6% higher at 6,922.05 points, while the broader Topix index ended 0.3% lower at 4,184.11 points.

The yield on the two-year U.S. Treasury note fell by 2 basis points to 4.15%. Yields on the 10-year and 30-year U.S. Treasury notes both declined by 1 basis point.

Japan's 10-year government bond yield rose to 2.91%, its highest level since 1996.

The U.S. dollar index was down 0.3% at 99.32.

Sterling rose 0.2% against the U.S. dollar to $1.3565, reaching a three-month high.

Spot gold gained 0.78% to trade at $4,409 per ounce.

Crude oil prices fell, with Brent crude sliding over 0.3% and WTI crude falling over 0.6%.

Dow Futures Under Pressure, Nasdaq Futures Rally

U.S. stock index futures were mixed, with Dow futures down 0.13%, S&P 500 futures up 0.1%, and Nasdaq 100 futures up 0.5%. This follows the S&P 500's consecutive record highs, as the market continues to monitor economic data and Federal Reserve policy direction.

On the economic data front, investors will be watching the August New York State Manufacturing Index and the NAHB Housing Market Index for further clues on the health of the U.S. economy. Regarding the Fed, the market is anticipating the release of the minutes from its July meeting on Wednesday, seeking more insight into the interest rate path and any policy divergence among committee members.

In corporate earnings, a busy week lies ahead for the retail sector, with Home Depot and Lowe's set to report results on Tuesday and Wednesday, respectively, and Walmart scheduled to release its earnings on Thursday. Retail consumer spending performance will also serve as a key indicator for the market to assess the resilience of the U.S. economy.

Dollar Slips for Third Day, Nearing May Lows, as Fed Independence Concerns Grow

The U.S. dollar index fell for a third consecutive day, approaching its lowest level since May. Weak U.S. economic data has diminished market expectations for further monetary policy tightening by the Federal Reserve, eroding the interest rate support that had previously bolstered the dollar.

Richard Franulovich, head of foreign exchange strategy at Westpac Banking Corporation in Sydney, stated that regular dialogues between President Trump and Fed Chair Kevin Warsh, along with Trump's latest attempt to remove Fed Governor Lisa Cook, are also weighing on the dollar.

He noted that the frequent communication between Trump and Warsh, the renewed attempt to oust Cook, and the uncertainty surrounding the Fed's future reaction function are all contributing to a growing market skepticism regarding the dollar's safe-haven status. Furthermore, the trend of de-dollarization is regaining attention, a factor that has been further reinforced by the recent sharp rise in long-term U.S. Treasury yields.

Gold Prices Rise as U.S. Rate Hike Expectations Cool

Spot gold advanced 0.78% to $4,409 per ounce. A weaker dollar, combined with soft U.S. economic data, has alleviated market concerns about further policy tightening by the Federal Reserve, providing support for gold prices.

Recent data shows that the U.S. Consumer Confidence Index fell for the first time in three months, and retail sales recorded their largest single-month decline in over a year. These developments have further intensified concerns about an economic growth slowdown and have cooled expectations for a Fed rate hike.

At the same time, a resurgence in investor demand and continued gold purchases by global central banks are providing additional support for the yellow metal. Last week, gold broke above its 100-day moving average for the first time since April and is currently maintaining that level.

According to data from ANZ Bank, global central banks collectively purchased 244 tonnes of gold in the first quarter of 2026, marking the strongest quarterly buying volume since the fourth quarter of 2024.