It’s starting to look a lot like the Reuters rate cuts

A look at the day ahead in European and global markets from Tom Westbrook

With the vast majority of Fed policymakers poised to cut interest rates, a global easing cycle is expected.

Lower US rates give smaller markets room to move. Already on Thursday, the Bank of Korea opened the door to a rate cut in October. Bank Indonesia lined up cuts in the fourth quarter.

Traders have been steadily selling the dollar, seeing short-term US rates – currently at 5.25-5.5% – as the most likely to fall. Markets priced in 161 basis points of easing in Europe by the end of next year and 135 bps in the UK versus 222 bps in the US

The dollar hit one-year lows against the pound and the euro, each falling from major resistance as markets ponder whether a cyclical decline in the greenback is ahead.

U.S. and European PMI figures due later Thursday could measure relative momentum in each economy, although sluggish growth on the continent has been no barrier to the euro’s strong rally in recent weeks.

A cheaper dollar also tends to be positive for global growth by encouraging emerging market investment and giving other economies breathing room to keep interest rates lower and a positive for commodities.

Metal prices rebounded from multi-month lows, helped by reports of more supportive measures for China’s housing market.

Meanwhile, oil has its own problems and traders are concerned about demand as data points to a weakening economy. At $76.11 a barrel, futures are near their lowest level of the year.

Japanese factory activity fell in August, the data showed, albeit only just, while the services sector expanded.

Key developments that could influence markets on Thursday:

Economy: PMIs in Europe, UK and US, US jobless claims

Earnings: Swiss Re (OTC:)

(By Tom Westbrook; Editing by Christopher Cushing)