Dollar Falls as Fed Rate-Cut Bets Rise, Bitcoin Hits Record High Amid Global Market Pause
Global markets paused for breath on Thursday as traders ramped up bets that the U.S. Federal Reserve will cut interest rates next month, pressuring the dollar and boosting bitcoin to a fresh record high. The MSCI gauge of Asia-Pacific shares outside Japan hovered near its highest level since September 2021, echoing Wall Street’s rally that saw the S&P 500 and Nasdaq notch new closing highs for a second consecutive day. However, the broader MSCI All Country World Index, which hit a record on Wednesday, was little changed in early Thursday trading.
The U.S. dollar weakened to a two-week low against a basket of major currencies amid shifting monetary policy expectations. Traders are now pricing in a near certainty of a September rate cut, with the probability of an aggressive 50 basis point move rising to 7%, according to CME’s FedWatch tool—up from zero just a week earlier. Treasury Secretary Scott Bessent’s comments about potential policy shifts further fueled speculation. Goldman Sachs forecasts three 25-basis-point cuts this year and two more in 2026.
Currency markets saw the Japanese yen surge to a three-week high of 146.38 per dollar after Bessent said the Bank of Japan is likely to raise rates to combat inflation risks. The yen also strengthened against the euro and British pound. BOJ Governor Kazuo Ueda has signaled readiness for further hikes but remains cautious, citing uncertainty over the impact of U.S. trade tariffs on Japan’s economy and corporate profits.
The crypto market benefited from the dovish policy outlook, with bitcoin climbing to an all-time high of $124,480.82, up 32% year-to-date. Ether, the second-largest cryptocurrency, has gained 41% in 2025 and is nearing its November 2021 peak. Analysts attribute the surge to both monetary easing expectations and recent financial sector reforms, which have increased investor appetite for digital assets.
In commodities, gold edged higher while oil prices rebounded slightly after a two-month low, as investors monitored upcoming geopolitical developments. Focus is on Friday’s meeting between U.S. President Donald Trump and Russian President Vladimir Putin, which could influence energy markets. Meanwhile, investors await key U.S. producer price data later today and retail sales figures on Friday, with analysts noting that softer economic data could reinforce the “bad news is good news” narrative—supporting lower yields, a weaker dollar, and stronger risk appetite.
Source: Reuters