Dollar falls as markets bet on big Fed rate cuts

Odaily Odaily News: The dollar fell during Monday's Asian session as traders increasingly bet on a 50 basis point rate cut by the Federal Reserve this week. The dollar's decline boosted major currencies such as the yen, which rose to its highest level since July 2023. After weeks of debate over whether the Federal Reserve will start its easing policy with a 25 basis point or 50 basis point rate cut, traders are leaning towards the latter option. Futures prices tied to the Fed's decision to cut interest rates this week show a probability of about 58% for a 50 basis point cut, compared with a fifty-fifty forecast late Friday. "We believe that the Fed is about to usher in a new round of easing cycle, which is a major headwind for the dollar," said Rodrigo Catril, a strategist at National Australia Bank. "As the Fed eases monetary policy next year and cuts the funds rate to neutral or even below neutral, the dollar will begin a cyclical decline." (Jinshi)