• Traders now tip small chance of super-sized 50 bps Fed cut
next
month
• Bessent urges rapid Fed cuts, early BOJ hike, buoying yen
vs
dollar
• Bitcoin powered by improved risk sentiment, favourable
regulatory changes
• Aussie dollar rises to multi-week high on upbeat jobs data
(Updates prices ahead of European markets open)
By Kevin Buckland
TOKYO, Aug 14 (Reuters) - The U.S. dollar languished at
multi-week lows versus major peers on Thursday as traders ramped
up bets for the Federal Reserve to resume reducing interest
rates next month.
The greenback fared worst against the yen after U.S.
Treasury Secretary Scott Bessent suggested the Bank of Japan
needs to hike rates again soon, while the Fed cuts aggressively.
Rising expectations for monetary easing combined with
increasing institutional cryptocurrency investment powered
bitcoin to a fresh record peak.
Australia's dollar gained after data showed the labour
market to be surprisingly resilient.
That was a different story than the U.S., where Fed rhetoric
has turned broadly more dovish on signs of a cooling labour
market, while President Donald Trump's tariffs are yet to add to
price pressures in a significant way.
Traders see a Fed rate cut on September 17 as a near
certainty, according to LSEG data, and even lay around 7% odds
on a super-sized half-point reduction.
"For the markets, it's not even a matter of if the Fed cuts
interest rates in September, it's a question of how much," said
Kyle Rodda, an analyst at Capital.com.
"Signs of a downturn in the labour market have pushed
futures to bake in a series of rate cuts before the end of the
year."
The Fed also continues to be under intense political
pressure to ease.
Trump has repeatedly criticised Fed Chair Jerome Powell for
not cutting rates sooner, even threatening to oust him before
Powell's term expires in May.
Treasury Secretary Scott Bessent on Wednesday called for a
"series of rate cuts," and said the Fed could kick off the
policy easing with a half-point cut.
Bessent also said the BOJ had gotten "behind the curve" by
delaying rate hikes.
"Bessent's comments are having a strong impact on USDJPY,"
said Norihiro Yamaguchi, an economist at Oxford Economics.
At the same time, "gains in the yen are being accelerated by
low liquidity in the market as fewer market participants are
around this week" due to the Obon holiday, he said.
The U.S. dollar dropped as much as 0.7% to 146.35 yen
on Thursday, its weakest since July 24.
Sterling edged up enough to reach its highest since
July 24 at $1.3590.
The euro hovered at $1.1703, just below
Wednesday's peak of $1.1730, a level last seen on July 28.
Meanwhile, a weaker U.S. dollar, the spectre of political
interference in central bank policy, and the increase in
investor risk appetite amid Fed easing prospects all converged
to buoy bitcoin to its first record peak since July 14.
The world's leading cryptocurrency pushed as high as
$124,480.82 in the latest session, before last changing hands at
around $123,000.
Bitcoin was already underpinned by increased institutional
money flows this year in the wake of a spate of regulatory
changes spearheaded by Trump, who has billed himself the
"cryptocurrency president."
In the latest move, an executive order last week paved the
way to allow crypto assets in 401(k) retirement accounts.
"Corporate treasuries like MicroStrategy and Block Inc.
continue to buy bitcoin," said IG analyst Tony Sycamore.
"Technically, a sustained break above $125,000 could propel
bitcoin to $150,000."
The Australian dollar advanced as much as 0.4% to the
highest since July 28 at $0.65685, although it later trimmed
those gains to stand at $0.6552.
Australian employment rebounded in July as firms took on
more full-time workers, pulling the jobless rate down from a
3-1/2-year high.
The upbeat report implied there was less urgency for the
Reserve Bank of Australia to follow up this week's rate cut with
another in September.
(Reporting by Kevin Buckland; Editing by Shri Navaratnam;
Editing by Sam Holmes)
