Dollar falls as markets bet on big Fed rate cuts
According to ChainCatcher news, as traders increasingly bet on the Federal Reserve cutting rates by 50 basis points this week, the US dollar weakened during the Asian trading session on Monday. The decline in the US dollar has boosted major currencies such as the Japanese yen, with the yen rate rising to the highest level since July 2023. After weeks of debate over whether the Federal Reserve will initiate its easing policy with a 25 or 50 basis point rate cut, traders are leaning towards the latter option. Futures prices linked to the Federal Reserve's rate decision this week show a 58% probability of a 50 basis point cut, compared to a 50-50 chance predicted late last Friday. Rodrigo Catril, a strategist at National Australia Bank, said: "We believe the Federal Reserve is about to enter a new easing cycle, which is a major negative factor for the US dollar. As the Federal Reserve eases monetary policy next year, lowering the federal funds rate to a neutral level or even below, the US dollar will begin to decline cyclically."
