Dollar falls as markets bet on big Fed rate cuts

The dollar fell in Asian trading on Monday 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 Fed 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 50-50 forecast late Friday. Rodrigo Catril, a strategist at National Australia Bank, said: "We believe that the Fed is about to usher in a new round of easing cycle, which is a major negative factor for the dollar. As the Fed eases monetary policy next year and lowers the funds rate to neutral or even below neutral levels, the dollar will begin a cyclical decline." (Jinshi)