CBA: Investors' bets on the Federal Reserve cutting interest rates by 50 basis points are heating up

The US dollar fell slightly during Asian trading hours as financial markets anticipate a higher likelihood of the Federal Open Market Committee cutting interest rates by 50 basis points this week. However, Kristina Clifton, a foreign exchange strategist at Commonwealth Bank of Australia (CBA), said that market liquidity remains thin due to public holidays in Japan and China. She stated that the federal funds futures market indicates a 60% chance of the Fed cutting rates by 50 basis points, up from around 50% last Friday. Clifton added that the dollar could weaken this week due to global easing cycle pressuring safe-haven currencies. However, if dovish expectations for the Fed fall short at this meeting, the dollar may rebound later this week.