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Dollar under pressure on rising Fed rate-cut wagers

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Risk-on rally lifts bitcoin to record high

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Analysts caution economic data could alter rate

expectations

(Updates to Asian afternoon)

By Jaspreet Kalra

SINGAPORE, Aug 14 (Reuters) - The U.S. dollar was under

pressure on Thursday as traders piled into wagers that the

Federal Reserve will resume cutting interest rates next month,

powering bitcoin to a record high, while a blistering rally in

global stocks took a breather.

MSCI's gauge of equities in Asia excluding Japan

lingered near its loftiest level since September

2021, taking cues from Wall Street, where the S&P 500 and

Nasdaq indexes hit new closing highs for the second

straight day.

The MSCI All Country World Index rose to a

record high for the second straight session on Wednesday and was

last nearly flat on Thursday.

Futures markets indicated that European and U.S.

shares were poised for a muted start.

The dollar fell to a two-week low against a basket of major

peers on shifting expectations of U.S. rate cuts, with

comments from the U.S. Treasury Secretary Scott Bessent also

sparking some wagers on an outsized 50 basis point cut.

Goldman Sachs expects the U.S. Federal Reserve to deliver

three, 25-basis-point interest rate cuts this year and two more

in 2026.

Traders are currently pricing in a near certainty of a

rate cut in September, with odds of a more aggressive 50 bps cut

rising to 7%, up from 0% a week earlier, per CME's FedWatch

tool.

"A rate cut in September seems likely given the recent

job market revisions," said Ben Bennett, APAC investment

strategist at Legal and General Investment Management.

"But inflation data remains sticky, and there's no sign

of a serious economic downturn, so the Fed will probably want to

keep their options open for the rest of the year," he said.

The biggest mover in FX during Asian hours was the Japanese

yen, which climbed to a three-week high of 146.38 per

dollar after Bessent said in a media interview that that Bank of

Japan will likely be raising interest rates as it is behind the

curve in dealing with the risk of inflation.

The yen also firmed broadly against the euro and British

pound.

BOJ Governor Kazuo Ueda has signalled readiness to keep

raising rates but justified going slow on the view that

"underlying inflation," which focuses on domestic demand and

wages, remains short of the BOJ's target.

The BOJ has also been wary of raising rates before

policymakers have more clarity on the impact of U.S. trade

tariffs on the Japanese economy and corporate profits.

CRYPTO SURGE

Optimism on monetary policy easing in the world's largest

economy also powered cryptocurrency bitcoin to an

all-time high of $124,480.82 with analysts also pointing to

recent financial sector reforms as a tailwind for the asset

class.

Bitcoin has risen 32% so far in 2025, and the second largest

cryptocurrency, ether, has climbed 41% and is hovering

just shy of its all-time high hit in November 2021.

In commodity markets, gold prices nudged up and crude

oil prices were a tad higher after hitting a two-month low on

Wednesday as investors kept their focus on the summit between

U.S. President Donald Trump and Russian leader Vladimir Putin on

Friday.

Trump on Wednesday threatened "severe consequences" if Putin

did not agree to peace in Ukraine but also said that a meeting

between them could swiftly be followed by a second one that

would include Ukrainian President Volodymyr Zelenskiy.

In the past, Trump has said both sides will have to swap

land to end fighting that has cost tens of thousands of lives

and displaced millions.

"While lack of progress towards a ceasefire may lead to

renewed threats of secondary oil tariffs/sanctions, we see

limited risk of large disruptions in Russia supply," analysts at

Goldman Sachs wrote in a note.

Investor are also awaiting U.S. producer price inflation

data later in the day, followed by the retail sales report on

Friday.

DBS analysts reckon that investors are likely to apply

the "bad news-good news" rule, treating soft U.S. data as a cue

for lower yields, a weaker dollar and stronger risk appetite

while seeing stronger data as a brake to the easing narrative.