US dollar slips as traders bet on Fed rate cut of 50 basis points

The U.S. dollar fell against most of its peers on Friday as expectations resurfaced that the Federal Reserve would cut interest rates by 50 basis points next week.

“The US dollar is falling against almost every currency in the world today as speculation grows that a 50 basis point rate cut is still on the table for next week’s FOMC meeting. In the derivatives market, the odds of this happening are at their highest in several weeks,” said Marc Chandler, managing director of Bannockburn Global Forex, in an emailed comment.

The ICE US Dollar Index lost 0.3% to 101.09 in recent trading, according to FactSet data. Against the yen, the US dollar lost 0.6% to 140.92 yen. The euro rose 0.1% to $1.11, while the Swiss franc rose 0.4% to $1.18.

Fed fund futures traders early Friday estimated the probability of a 50 basis point rate cut next week was 43 percent, the highest level yet, according to CME Group data.

Strategists said the article by Nick Timiraos of the Wall Street Journal helped revive the notion that a 50 basis point cut was still up for debate. Market-based expectations for such an outcome had fallen sharply earlier in the week.

Former New York Fed President Bill Dudley also called for a 50 basis point increase at a conference in Singapore.