Dollar struggles as Fed rate-cut bets build; bitcoin soars to record high
Rising expectations for Fed easing combined with increasing institutional cryptocurrency investment powered bitcoin to a fresh record peak.
Australia's dollar gained after data showed the labour market was surprisingly resilient.
It was a slightly different story in the U.S. where Fed rhetoric has turned overall more dovish of late on signs of a cooling labour market, while President Donald Trump's tariffs have not added to price pressures in a significant way just yet.
Traders see a Fed rate cut on September 17 as a near certainty, according to LSEG data, and even lay around 7 per cent 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 Bank of Japan had gotten "behind the curve" by delaying rate hikes.
The U.S. dollar dropped 0.7 per cent to 146.38 yen, its weakest since July 24.
Sterling edged up enough to reach its highest since July 24 at $1.3590.
The euro hovered at $1.1712, just below Wednesday's peak of $1.1730, a level last seen on July 28.
The U.S. dollar index, which measures the currency against those three rivals and three other major counterparts, eased slightly to 97.673. It dropped some 0.8 per cent over the previous two sessions, having dipped to 97.626 on Wednesday for the first time since July 28.
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 $123,538.31.
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 gained as much as 0.4 per cent to the highest since July 28 at $0.65685.
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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
26 minutes ago
- Business Times
For just US$1 million, wealthy investors can buy a stake in hedge fund Millennium
[NEW YORK] For just US$1 million, investors are being offered a slice of one of the world's largest hedge fund firms. Goldman Sachs is offering clients a stake in Izzy Englander's Millennium Management for a minimum commitment of US$1 million and as much as US$20 million, according to documents being circulated by the bank. Millennium, which oversees more than US$78 billion, is seeking buyers for a 10 to 15 per cent equity stake in the firm at a roughly US$14 billion valuation. At the higher end of the range, that would mean a US$2 billion money raise, with roughly half coming from Goldman's Petershill Partners unit and the rest coming from Millennium, approaching large institutions, such as existing sovereign-wealth fund clients. The Goldman team has been fanning out to canvass potential investors, including high-net worth clients and even people working at Millennium's main competitors, according to sources familiar with the matter, who asked not to be named as the discussions are private. Millennium and Goldman declined to comment. Tapping Petershill indicates an attempt to broaden out the group of potential buyers from institutions towards wealthy individuals. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Petershill will put the money it raises in a special-purpose vehicle, which will then charge clients a 1 per cent management fee and 10 per cent of carry from the investment vehicle, according to the documents. Institutions buying their stakes directly in Millennium do not pay the additional layer of fees. Millennium's history of consistent returns may draw investors. Since 1990, its hedge fund has lost money in only one year, 2008, when it fell 3.5 per cent. It has made 10 per cent or more in all but nine years. And its clients' money is locked up for five years, limiting the potential for sudden outflows. Englander, 76, founded Millennium in 1989, building his hedge fund into a behemoth with more than 320 investment teams. Millennium has expanded so much in recent years that the company has started giving some of its capital to other hedge funds to manage. Big-name hedge funds have sold stakes in the past. Millennium would be the first hedge fund giant to tap a wider range of buyers. Earlier this year, Verition Fund Management entered into an agreement to sell a minority stake in the firm to Affiliated Managers Group. Last year, Ken Griffin said that he would be open to the possibility of selling a minority stake in Citadel, the multistrategy hedge fund he founded in 1990. BLOOMBERG
Business Times
26 minutes ago
- Business Times
Oil prices climb 2% to one-week high as Fed rate cut, Trump-Putin talks loom
[NEW YORK] Oil prices climbed about 2 per cent to a one-week high on Thursday after US President Donald Trump warned of 'severe consequences' if his talks with Russian President Vladimir Putin on Ukraine fail and on expectations that a US interest rate cut next month could spur oil demand. Central banks, like the US Federal Reserve, use interest rates to control inflation. Lower interest rates reduce consumer borrowing costs and can boost economic growth and demand for oil. Brent crude futures rose US$1.03, or 1.6 per cent, to US$66.66 a barrel at 1.32 pm EDT (1732 GMT), while US West Texas Intermediate (WTI) crude rose US$1.14, or 1.8 per cent, to US$63.79. Those price gains pushed both crude benchmarks out of technically oversold territory for the first time in three days and put Brent on track for its highest close since Aug 6. Brent closed on Tuesday at its lowest price since June 5 and WTI closed at its lowest price since June 2 due in part to bearish inventory and supply data from the US Energy Information Administration and the International Energy Agency. Trump said on Thursday he thought Putin was ready to make a deal on ending his war in Ukraine after the Russian president floated the prospect of a nuclear arms agreement on the eve of their summit in Alaska. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But on Wednesday, Trump threatened 'severe consequences' if Putin does not agree to peace in Ukraine. The US president did not specify what the consequences could be, but he has warned of economic sanctions if the meeting on Friday proves fruitless. Russia was the second-biggest producer of crude in 2024 behind the US, so any agreement that could ease sanctions on Moscow would likely boost the amount of Russian oil available for export to global markets. Trump has threatened to enact secondary tariffs on buyers of Russian crude, primarily China and India, if Russia continues its war in Ukraine. 'The uncertainty of US-Russia peace talks continues to add a bullish risk premium given Russian oil buyers could face more economic pressure,' Rystad Energy said in a client note. Some analysts, however, remained sceptical that Trump would take action that could significantly disrupt oil supplies. Fed rate cut Expectations that the Fed will cut interest rates in September also propped up oil prices. Traders overwhelmingly believe a cut will happen next month after US consumer prices increased at a moderate pace in July. US Treasury Secretary Scott Bessent said he thought an aggressive half-percentage-point cut was possible given recent weak employment numbers. But the Fed has a dilemma, US producer prices increased by the most in three years in July amid a surge in the costs of goods and services, suggesting a broad pickup in inflation was imminent. In other energy news, Norwegian oil and gas investments are expected to peak this year, and start declining next year as major projects are completed, a statistics office survey of industry players showed on Thursday. Norway produces about 2 per cent of global oil. It became Europe's largest supplier of pipeline gas after Russia's invasion of Ukraine in February 2022. In Mexico, President Claudia Sheinbaum said on Thursday that Carlos Trevino, former CEO of state oil company Pemex, had been arrested in the United States and would be deported to stand trial in Mexico for corruption charges. REUTERS
Business Times
an hour ago
- Business Times
US: Stocks hold steady after wholesale prices jump
[NEW YORK] Wall Street stocks shook off early losses to finish essentially flat on Thursday as markets digested disappointing inflation data that complicates expectations for lower Federal Reserve interest rates. The producer price index rose 0.9 per cent on a month-on-month basis, much greater than analysts expected following benign consumer pricing data earlier this week. The Dow Jones Industrial Average finished down less than 0.1 per cent at 44,911.26. The broad-based S&P 500 edged up less than 0.1 per cent to 6,468.54, while the tech-rich Nasdaq Composite Index was virtually unchanged at 21,710.67. Markets have been monitoring inflation in light of President Donald Trump's tariffs, with Tuesday's consumer price report adding to confidence the Fed will lower rates in September. But after Thursday's report, a potential half-point interest rate cut is probably 'off the table,' said Jack Ablin of Cresset Capital Management. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The report 'suggests that companies are currently bearing the brunt of tariffs,' Ablin said. 'We would expect that companies will start to pass these costs along.' Among individual companies, Intel surged 7.4 per cent following a Bloomberg News report that Trump is considering an investment in the beleaguered chip company in exchange for a government stake. Such a deal would represent Trump's latest departure from the US government's traditional laissez-faire posture towards business. Deere & Co sank 6.8 per cent after it reported a drop in profits and lowered the ceiling of its full-year earnings range. AFP
