FOREX-Dollar declines following unexpected US inflation
FOREX-Dollar declines following unexpected US inflation

The dollar lost further ground versus other major currencies on Thursday, as traders reduced their bets on an aggressive interest rate increase by the Federal Reserve in response to softer-than-expected U.S. inflation statistics the day before, which caused the dollar to lose more ground against other major currencies.

The dollar index continued to decline during the early European trading day, down 0.2% to 105.010 after seeing its worst daily decline in five months the day before, which was 1%. Following a 1.3% increase in June, data released on Wednesday indicated that U.S. consumer prices were steady month over month in July.

According to currency analysts at Commerzbank, "Wednesday's data gave hope that inflation has peaked and the Fed will need to raise rates less sharply to keep inflation under control." Traders reduced their bets that the Fed will increase rates by 75 basis points for a third consecutive time at its policy meeting in September and now believe a half-point increase is more likely.

The weaker dollar helped several currencies, like the euro and Japanese yen, which both increased their gains from the day before. At USD 1.03255, the euro was last up a quarter of a percent.

To 132.615 yen per dollar, the yen increased by 0.2%. After increasing by more than 1% the day before, the pound remained essentially unchanged against the dollar at USD 1.22250.

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