The US dollar continued its losses after several US Federal Reserve officials signaled they were not in favor of raising interest rates..

It disappointed investors who had expected the US Federal Reserve to raise interest rates by 100 basis points on the back of the highest inflation data in 4 decades.

St. Louis Fed President Waller and James Bullard both said they were leaning toward a 75-basis-point rate hike at the July 26-27 Fed meeting, rather than a 100-basis-point move, to cushion the negative effects on the economy.

Those comments late last week pushed the dollar back from a two-decade high and led to gains in other currencies, now that the U.S. Federal Reserve is expected to raise interest rates by just 75 basis points.

The European Central Bank is expected to raise interest rates by 25 basis points on Thursday, and investors are waiting to see if it outlines plans to tackle rising bond yields in southern countries, particularly Italy.

Meanwhile, other central banks are ramping up interest rate hikes as the Canadian central bank approved a 100 basis point hike last week, sending the dollar into losses against the Canadian currency.

On the other hand, higher inflation data from New Zealand, the highest in three decades, fueled speculation that the Reserve of New Zealand would move 75 basis points faster, sending the New Zealand dollar to a 10-day high against the greenback.

Commodity currencies also received support after Chinese officials announced their support for the real estate sector, leading to higher iron and copper ore prices that added to the US dollar’s losses against its Australian counterpart.

Now the dollar

The dollar index – which measures the US currency’s performance against a basket of 6 major currencies – fell 0.72% to 107,211 points.

The euro gained 0.80% against the dollar to trade at 1.0161 dollars, while the dollar fell 1.28% against the Japanese yen to trade at 138.16 Japanese yen.

On the other hand, the pound rose 1.23% against the dollar to $1.2001, and the Australian dollar rose 0.69% to $0.6840 against the US dollar.

At the same time, the US dollar fell 0.69% against the Canadian dollar to trade at 1.2942 Canadian dollars, and the dollar lost 0.20% against the Swiss franc to trade at 0.9752 francs.

Analysts’ View of the Dollar’s Performance

The research leader looks on MUFG Derek Halpenny says risk appetite has returned as equity markets remain in positive territory, so Fed Governor Christopher Waller’s comments, coming in at a 100 basis point hike, had the desired effect.

However, as the data shows, speculators remain bullish on the dollar CFTC US weekly long positions in the dollar are at seven-week highs, while short positions in the euro and yen have grown.