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Expectations regarding the timing of the first post-crisis interest rate hike continue to recede, as incoming economic data remains lackluster. This morning, data released by the Commerce Department showed that U.S. retail sales inched forward by just 0.1% in September relative to the previous month. Although that was in line with the consensus estimate, if autos and gasoline are excluded, then sales were flat for the month versus a consensus estimate that called for growth of 0.3%.

The impact of the weak readings was clearly seen in the Fed Funds futures market. Yesterday, prices implied a cumulative probability of a 2015 rate rise of 41%. Today, that number has slumped to just 32% (with December seen as the most likely option between the two remaining FOMC meetings).

The data had an impact on the foreign exchange market, too. Bloomberg reports that its Bloomberg Spot Index, which measures the dollar's value against 10 major currencies, had declined 0.7% to 1,185.98 as of 2:24 p.m. EDT -- its lowest value since June 30. Against the euro, the dollar fell as much as 0.86% to its lowest value since Aug. 25:



Dollar Strengthening/ Weakening
















Source: Bloomberg as of 3:06 p.m. EDT on Oct. 14, 2015. CAD = Canadian dollar. GBP = British pound.

Any indication that the first rate rise will be pushed back makes the dollar relatively less attractive, as a policy rate increase would entail an increase in the rate investors can earn on their dollar deposits.

Furthermore, today's release supports what appears to be a growing view among Fed policymakers that the central bank ought to remain patient and wait until 2016 to implement its "lift-off." That's the position of Daniel Tarullo, who is a member of the Board of Governors and the Federal Open Market Committee (the committee that sets rates). Yesterday, Tarullo told CNBC:

Right now, my expectation is, given where I think the economy would go, I wouldn't expect it would be appropriate to raise rates. ... I want to hasten to add that that is an outlook that changes based on developments in the economy.

Yes, yes, we know: "Data-dependent" has been the Fed's watchword under the stewardship of chairwoman Janet Yellen, and right now that data is disappointing.