The U.S. dollar was under pressure on Thursday as traders piled into wagers that the Federal Reserve will resume cutting interest rates next month, powering bitcoin to a record high, while a blistering rally in global stocks took a breather.

MSCI's gauge of equities in Asia excluding Japan, lingered near its loftiest level since September 2021, taking cues from Wall Street, where the S&P 500 and Nasdaq indexes hit new closing highs for the second straight day.

The dollar fell to a two-week low against a basket of major peers on shifting expectations of U.S. rate cuts, with comments from the U.S. Treasury Secretary Scott Bessent also sparking some wagers on an outsized 50 basis point cut.

Goldman Sachs expects the U.S. Federal Reserve to deliver three, 25-basis-point interest rate cuts this year and two more in 2026.

Traders are currently pricing in a near certainty of a rate cut in September, with odds of a more aggressive 50 bps cut rising to 7%, up from 0% a week earlier, per CME's FedWatch tool.

The biggest mover in FX during Asian hours was the Japanese yen , which climbed to a three-week high of 146.38 per dollar after Bessent said in a media interview that that Bank of Japan will likely be raising interest rates as it is behind the curve in dealing with the risk of inflation.

The yen also firmed broadly against the euro and British pound.

BOJ Governor Kazuo Ueda has signalled readiness to keep raising rates but justified going slow on the view that "underlying inflation," which focuses on domestic demand and wages, remains short of the BOJ's target.

The BOJ has also been wary of raising rates before policymakers have more clarity on the impact of U.S. trade tariffs on the Japanese economy and corporate profits.

Source : Reuters