Currencies keep tight ranges as market awaits more indication of U.S. rates By Reuters

By Brigid Riley

(Reuters) – The U.S. dollar held close to its lowest level in more than a year against a basket of peers on Wednesday, with sterling trading near multi-year highs as markets focused on indices with on the size of a widely expected US rate cut next month.

Cryptocurrency bitcoin grabbed Asia’s early attention, falling more than 6% after falling below support around $60,000.

But the overall movements in the currency market were muted as traders awaited further clues about the state of the world’s largest economy.

Investors are unanimous in betting that the Federal Reserve will begin cutting interest rates next month, after Chairman Jerome Powell’s dovish tilt last week, with the debate now centering on whether or not it will be a 50 basis point cut.

The current price has a 36% chance of a bigger cut, up from 29% a week ago, according to CME Group’s (NASDAQ: ) FedWatch tool.

Markets, which are fully priced in for a 25 basis point cut next month, see an easing of just over 100 basis points by the end of the year.

A preliminary estimate for second-quarter US gross domestic product is due later this week, along with the Fed’s preferred measure of inflation, the personal consumption expenditures (PCE) index.

But with the focus shifting from inflation to the strength of the economy, the importance of this week’s PCE data is “debatable,” said Matt Simpson, senior market analyst at City Index.

“It will take a strong positive surprise to dispel expectations of more Fed tapering.”

which measures the greenback against a basket of currencies, was 0.02% higher at 100.61, above a 13-month low of 100.51 hit in the previous session.

For the month, the dollar is down 3.4%, putting it on track for its biggest monthly decline since November 2022.

But with markets pricing in September easing for several weeks, the dollar’s downward momentum appears to be waning, with support built around 100.18/30, Simpson said.

The pound eased slightly to $1.32585 after hitting its highest level since March 2022 against the greenback at $1.3269 on Tuesday.

The euro fell 0.05 percent to $1.117825 and was not far from a 13-month peak hit at the top of the week.

The yen fell further from Monday’s three-week high of 143.45 against the greenback and was 0.18 percent lower at 144.225 per dollar.

Elsewhere, the Australian dollar was little changed at $0.6791, ahead of inflation data that could be moving the market due to a wide range of forecasts. It remained close to the one-month high of $0.67985 hit on Friday.

In cryptocurrencies, bitcoin was last down 4.37% at $59,137.00 after falling more than 6% earlier in trade.