Dollar's Dance: Fed's Rate Rumblings and Bitcoin's Surge

The U.S. dollar edged higher against other major currencies on Thursday, yet lingered near multi-week lows amid growing speculation that the Federal Reserve will recommence interest rate cuts next month. Contrary to this trend, the yen strengthened with the dollar hitting a three-week low against the Japanese currency. This followed remarks by U.S. Treasury Secretary Scott Bessent, who suggested the Bank of Japan needs to hike rates again soon, as the Fed aggressively cuts.

The outlook for monetary easing, coupled with a surge in institutional cryptocurrency investment, propelled bitcoin to a new record earlier in the day. The Federal Reserve's rhetoric has turned more dovish due to signs of a cooling labor market, while President Donald Trump's tariffs have yet to notably affect price pressures. Traders largely anticipate a Fed rate cut on September 17, according to LSEG data, with approximately 7% of traders considering a half-point reduction likely.

Meanwhile, bitcoin achieved its first record peak since July, with values pushing as high as $124,480.82, eventually retreating but maintaining institutional investment gains. This follows regulatory changes initiated by Trump, including an executive order that could sanction crypto assets in 401(k) retirement accounts. Analysts predict a sustained breakout could drive bitcoin up to $150,000.

(With inputs from agencies.)