Dollar Downturn and Bitcoin Boom: The Financial Weather Shift

The U.S. dollar hit multi-week lows against major currencies on Thursday, driven by traders' heightened expectations for the Federal Reserve to resume cutting interest rates next month. The dollar suffered most notably against the yen after comments from U.S. Treasury Secretary Scott Bessent urged the Bank of Japan to raise rates soon.

Bitcoin reached new heights amid rising institutional crypto investment, while the Australian dollar gained following strong labor market data. In contrast, the U.S. saw more dovish Fed rhetoric alongside cooling labor market signals. Traders are nearly certain of a Fed rate cut on September 17, with even a 7% chance of a larger half-point reduction.

Political pressures on the Fed increased, with Trump criticizing Chair Jerome Powell for slow rate cuts and threatening his dismissal. Additionally, Bessent called for aggressive cuts, impacting currency movement and contributing to the U.S. dollar's decline. Bitcoin achieved its first record peak since July, reflecting increased investor risk appetite amid Fed easing prospects.

(With inputs from agencies.)