The US Dollar Index (DXY), a chief gauge of the greenback against a basket of currencies, fell to its lowest level since April 2022 as inflation continues to slow. Investors are anticipating that the Federal Reserve will only raise interest rates one more time rather than the central bank’s projected two rate hikes. Is this the beginning of a prolonged dollar downturn?

According to the Bureau of Labor Statistics (BLS), producer prices rose 0.1% month-over-month in June, up from the 0.4% decline in May and below the market estimate of 0.2%. The core producer price index (PPI), which strips the volatile food and energy sectors, also jumped at a smaller-than-expected rate of 0.1%.

On a year-over-year basis, the PPI and core PPI eased to 0.1% and 2.4%, respectively.

On the labor front, the number of first-time unemployment claims eased to 237,000 for the week ending July 8, down from 249,000 in the previous week and below the consensus estimate of 250,000.

Continuing jobless claims rose to 1.729 million, while the four-week average, which eliminates the week-to-week volatility, fell to 246,750.

The US Treasury market extended its losses toward the end of the trading week, with the benchmark ten-year yield down 8.8 basis points to 3.773%. The two-year bill fell 11.8 basis points to 4.624%.

The leading recession indicator — the two-year and ten-year yields — remained deeply inverted.

According to the CME FedWatch Tool, the Federal reserve is widely expected to raise rates at the July Federal Open Market Committee (FOMC) but then leave the fed funds rate alone heading into 2023.

The US Dollar Index plunged 0.63% to 99.89, from an opening of 100.52, on Thursday. The DXY has suffered six consecutive sessions of losses. The index is on track for a weekly loss of at least 3%, adding to its year-to-date drop of 3.5%.

The USD/CAD currency pair dropped 0.46% to 1.3127, from an opening of 1.3188, at 17:09 GMT on Thursday. The EUR/USD advanced 0.69% to 1.1205, from an opening of 1.1130.