Dollar Slumps as Traders Increase Bets on Larger US Rate Cuts
The dollar slipped to a one-month low against the yen on Thursday, pressured by growing expectations of a sizable Federal Reserve rate cut next week. Weak U.S. economic data has fueled concerns about a slowdown, with traders now anticipating a possible 50 basis point rate reduction.
Dollar Struggles Amid Economic Concerns
The yen reached its highest level in a month, supported by safe-haven demand and the prospect of rate hikes by the Bank of Japan. In contrast, the dollar has faced pressure as traders bet on aggressive Fed rate cuts to counter a slowing U.S. economy.
Weaker-than-expected U.S. job openings data, along with softer manufacturing numbers, have added to market jitters. This week’s U.S. nonfarm payrolls report will be crucial in shaping expectations for the Fed’s September meeting.
Currency Market Moves
The euro rose 0.2% to $1.110, while sterling gained 0.2% to $1.3169. The Australian dollar remained steady at $0.6727 after earlier losses, supported by the Reserve Bank of Australia’s hawkish stance.
Meanwhile, traders see a 45% chance of a 50 basis point cut from the Fed this month, with more than 100 basis points of cuts expected by year-end.
Labor Data in Focus
The upcoming U.S. nonfarm payrolls report is expected to show 160,000 jobs added in August, compared to 114,000 in July. A soft report could further solidify expectations for rate cuts, adding pressure on the dollar.
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