The market bets that the Federal Reserve will significantly cut interest rates, and the dollar falls

ChainCatcher news, as traders increasingly lean towards betting on a 50 basis point rate cut by the Federal Reserve this week, the dollar fell during the Asian trading session on Monday. The decline of the dollar boosted major currencies like the yen, which rose to its highest level since July 2023.

After weeks of debate over whether the Federal Reserve would initiate its easing policy with a 25 or 50 basis point cut, traders are leaning towards the latter option. Futures prices linked to the Fed's rate cut decision this week indicate a roughly 58% chance of a 50 basis point cut, compared to a 50-50 prediction late last Friday.

Rodrigo Catril, a strategist at the National Australia Bank, stated, "We believe the Federal Reserve is about to enter a new round of easing, which is a significant disadvantage for the dollar. As the Fed relaxes monetary policy next year, lowering the fund rate to neutral or even below neutral levels, the dollar will begin a cyclical decline." (Jin Ten)