Dollar Falls to Multi-Week Lows as Markets Await Fed Rate Cut Decision
The U.S. dollar recorded a notable decline against most major currencies on Thursday, hitting its lowest levels in several weeks, as investor bets intensified on the Federal Reserve moving to cut interest rates at its upcoming meeting on September 17. Market confidence has grown that such a cut is now almost certain, driven by clear signs of a slowdown in the U.S. labor market and a shift in the Fed’s tone toward more accommodative monetary policies.
Against the Japanese yen, the dollar fell by 0.7% to 146.38, its weakest level since July 24. The British pound rose to $1.3590, marking its highest level since the same date, while the euro traded near $1.1712, just below Wednesday’s peak of $1.1730. The U.S. Dollar Index, which measures the greenback against a basket of major currencies, dropped to 97.673 after touching 97.626 for the first time since July 28, posting a 0.8% decline over the past two sessions.
The dollar’s weakness has been fueled by several factors, including stronger investor risk appetite, potential political intervention in central bank policy, and firm expectations of a Fed rate cut. These conditions have also boosted high-risk assets, with Bitcoin climbing to its first new record high since July 14, reaching $124,480.82 before easing slightly to $123,538.31.
In other currency markets, the Australian dollar rose by 0.4% to $0.65685, its highest level since late July, supported by robust labor market data that strengthened its appeal.
Overall, the forex market reflects a cautious but focused sentiment, with attention firmly set on the upcoming Fed meeting. Traders are not only watching for confirmation of a rate cut but are also closely anticipating the scale of the reduction and its potential impact on the trajectory of U.S. monetary policy and the global economy for the remainder of the year.
