The US dollar slipped as markets continued to price in a September Fed rate cut, with USD/JPY dropping to near 146.40 amid dovish expectations and remarks from US Treasury Secretary Bessent. Strong Australian jobs data boosted the AUD, while sterling hit a three-week high and crypto extended gains.
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The yen was active during the session, with yen crosses rising. USD/JPY slid to lows near 146.40. The move reflected broad US dollar weakness amid rising expectations for a September Federal Reserve rate cut, with the widely anticipated 25bp move joined by increased talk of a possible 50bp reduction. Selling pressure on USD/JPY was compounded by remarks from US Treasury Secretary Scott Bessent, who not only criticised the Fed but also took aim at the Bank of Japan, calling it “behind the curve” and urging it to raise rates to control inflation.
Earlier, Chicago Fed President Austan Goolsbee struck a cautious note on September easing. While open to the idea of a cut, he stressed that the FOMC needs to see several months of favourable inflation before acting. He pointed to persistent services price pressures in the latest CPI and said the Committee was not yet convinced the labour market is deteriorating despite some signs of softness.
In Australia, labour force data was the main event. The unemployment rate dipped to 4.2% in July from 4.3% in June, while full-time employment posted its strongest monthly gain in 17 months. AUD/USD jumped as market pricing for a September RBA rate cut eased to around 30% from 40% before the release.
Elsewhere, GBP/USD touched a three-week high, supported by diverging Fed–BoE policy expectations, while the crypto complex extended gains, with Bitcoin and Ethereum both rallying on a mix of Fed easing hopes and strong inflows.
Asia-Pac
stocks:
- Australia
(S&P/ASX 200) +0.55% - Hong
Kong (Hang Seng) +0.05% - Shanghai
Composite +0.36% - Japan
(Nikkei 225) -1.5%
This article was written by Eamonn Sheridan at investinglive.com.