SINGAPORE, Sept 23 (Askume) – Bitcoin hit a new one-month high on Monday, extending its gains after the Federal Reserve cut interest rates last week, while the yen and other major currencies held steady as Japanese markets were on holiday.
The dollar strengthened against the yen after last week’s policy meeting between the United States and Japan, hitting its highest level in two weeks at 144.50 yen. It is at around 144.08 on Monday morning.
The Bank of Japan (BOJ) kept interest rates unchanged last week and said it was in no hurry to raise them again. The decision came just days after the Federal Reserve cut interest rates by 50 basis points, ending the yen’s sharp gains this month. The currency rose 1.4% in September.
As the holiday coincides with the autumn equinox holiday in Japan, the main driver of trading is expectations of further interest rate cuts from the Federal Reserve, boosting stocks, commodity currencies and other risk assets.
Bitcoin is up 0.8% to trade above $63,200, not far from a one-month high. AUD/USD is steady around $0.68, up more than 3% in less than two weeks.
The U.S. dollar index, which measures the greenback’s strength against major currencies, rose to 100.8, still above last week’s one-year low.
Goldman Sachs said in a report that the Federal Reserve’s interest rate cut “eases market concerns about a US economic slowdown.” “Our G10 FX team expects the dollar to strengthen slightly over the next three months, followed by a further softening in the six-month and 12-month outlook.”
According to CME FedWatch , Fed futures traders expect interest rates to be cut by 75 basis points by the end of this year and by about 200 basis points by December 2025. The Fed policy rate will reach 2.75% by the end of 2025 .
The U.S. Treasury yield curve has steepened after the Federal Reserve cut interest rates, with investors betting on a second sharp rate cut as Fed Governor Christopher Waller said on Friday he is concerned inflation could rise soon.
Meanwhile, most economists surveyed by Askume expect the Fed to cut interest rates by 25 basis points at its final two meetings this year.
Over the weekend, Republicans in the US House of Representatives proposed a three-month temporary bill to avert a government shutdown .
As for Yen, the ruling party votes this weekend to choose a new prime ministerThis will make the Bank of Japan’s job challenging in the coming months . A snap election could be held at the end of October.
The Liberal Democratic Party’s leading candidate to succeed outgoing Prime Minister Fumio Kishida has a different view on monetary policy.
Sanae Takaichi, who will become Japan’s first female prime minister , is a reflationist who accuses the Bank of Japan of raising interest rates too quickly. Ishiba said the central bank is “on the right policy path,” while Shinjiro Koizumi , the son of charismatic former Prime Minister Junichiro Koizumi, has so far said only that he respects the BOJ’s independence.
Barclays analysts wrote over the weekend that this option poses risks for the yen in both directions. “The main risk here is that if Abenomics supporters win, it could hinder the Bank of Japan’s plans to normalize policy and raise concerns about fiscal discipline,” they said.
That could lead to a steepening of the Japanese bond curve and pressure on the yen as investors lessen expectations for another rate hike, he said.
The Bank of England kept interest rates unchanged on Thursday, with the governor saying the central bank “needs to be careful not to cut rates too quickly or too much.”
Sterling fell 0.1% to $1.3310 , holding close to Friday’s high after strong UK retail sales data.。
