Dollar extends losses to four-week lows

Dollar tumbled in European trade against a basket of major rivals for the fourth straight session, plumbing four-week lows ahead of major US manufacturing data.

The Index

The dollar index fell 0.5% to 105.31, the lowest since July 5, after falling 0.3% on Friday, the third loss in a row on a large selloff. 

The index slid 0.7% last week, the second weekly loss in a row following the latest Fed's more bearish meeting, and after data on US recession.

The Fed

The Federal Reserve decided yesterday to hike rates by 75 basis points to 2.5%, the highest since December 2018 as expected.

Fed Chair Jerome Powell said the bank might slow down the pace of interest rate hikes, leading to a tumble in dollar and treasury yields.

He also said another big hike at the next meeting wouldn't be appropriate, but the decision will depend on economic data.

Recession

US economy shrank by 0.9% in the second quarter of 2022, the second such contraction in a row, while analysts expected a growth rate of 0.4%, after shrinking 1.6% in the first quarter.