US Dollar Slightly Weaker—Rate Cut Expectations Push Dollar-Yen Near 157

(New York=Yonhap Infomax) Jin Woo Choi—The US dollar edged lower.

Amid ongoing debate over an artificial intelligence (AI) bubble, risk-off sentiment prevailed, driving demand for safe-haven assets and putting downward pressure on the dollar as US Treasury yields declined.

Growing expectations for a Federal Reserve (Fed) policy rate cut also contributed to the dollar's weakness.

The yen continued to weaken as the New York session approached, with the dollar-yen rate nearing the 157 mark.

According to Yonhap Infomax (screen number 6411), as of 08:20 AM US Eastern Time on the 24th, the dollar index (DXY), which measures the value of the dollar against six major currencies, stood at 100.060, down 0.097 points (0.097%) from the previous close of 100.157.

Bitcoin declined, and risk appetite for assets eased slightly due to concerns over AI-related stocks.

Bitcoin fell to the $85,000 range, while Nasdaq 100 E-mini futures rose 0.95%. The futures index had climbed as much as 1.06% during the London session.

Expectations for a Fed rate cut are mounting.

According to CME FedWatch, as of 08:15 AM in New York, the federal funds rate (FFR) futures market reflected a 75.7% probability that the Fed will cut rates by 25 basis points in December, up 4.7 percentage points from the previous day's 71.0%.

Christopher Waller, a Fed Governor, said in a Fox News interview that a 25bp rate cut in December would be appropriate, but noted that January could be "a bit more challenging."

He added, "If inflation or employment suddenly rebounds, or if the economy accelerates sharply, that could be a cause for concern."

The dollar-yen exchange rate rose to 156.929 yen, up 0.539 yen (0.345%) from the previous session.

Akira Moroga, chief strategist at Aozora Bank, said, "With no clear catalyst for yen buying, the risk of further yen depreciation remains," adding, "Expectations for a Bank of Japan (BOJ) rate hike have become excessively low. If any factor revives rate hike expectations, the yen could rebound quickly."

Katsutoshi Inadome, senior strategist at Mitsui Sumitomo Trust Asset Management, noted, "Last week, there were no remarks to curb the strong yen depreciation," and analyzed, "Market sentiment is leaning further toward yen weakness."

Inadome also raised the possibility that the dollar-yen rate could reach 160 yen.

The pound-dollar exchange rate rose to $1.31124, up $0.00073 (0.056%) from the previous session.

Market participants are closely watching the UK Autumn Budget to be released on the 26th.

Nick Lees, head of macro at Monex, said, "The direction of the pound will depend on what downside risks this budget poses to the UK economy," adding, "That is what the market is focusing on."

He added, "From a market perspective, attention will not only be on the announcement itself, but also on the overall economic outlook presented by the government," diagnosing, "That outlook is likely to trigger an immediate reaction in the pound."

The offshore dollar-yuan (CNH) rate was unchanged at 7.1047. The euro-dollar rate rose to $1.15435, up $0.00250 (0.217%) from the previous session.

jwchoi@yna.co.kr

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