Dollar eases against euro as Fed rate cut outlook weighs

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NEW YORK (Reuters) -The U.S. dollar eased against the euro on Monday, extending last weeks fall, as the U.S. currency remains under pressure from the Federal Reserve last week signalling the possibility of interest rate cuts next year...

Bets that the Fed will lower its benchmark overnight interest rate at its March meeting by a quarter of a percentage point soared last week after the U.S. central bank left its policy rate unchanged in the 5.25%-5.50% range and officials forecast three-quarters of a percentage point in cuts next year...

The Federal Reserve is not pre-committing to cutting interest rates soon and swiftly, and the jump in market expectations that it will do so is at odds with how the U.S. central bank functions, Chicago Fed President Austan Goolsbee said on Monday.. Goolsbee was the latest in a slew of Fed speakers who have pushed back against financial market expectations of how abruptly the central bank will pivot to rate cuts, including Cleveland Fed President Loretta Mester, the New York Feds John Williams and Atlanta Feds Raphael Bostic...

The yen retreated on Monday, but held near its recent highs, as the Bank of Japan (BOJ) kicked off a two-day meeting that could be crucial in determining the timing of the end of the central banks ultra-loose stance on interest rates..

This shift in sentiment will no doubt be welcomed by the Bank of Japan and to some extent helps them out with respect to the weakness of the yen ahead of tomorrows rate decision, CMC markets strategist Michael Hewson said.. There is now less incentive for them to think about altering their current policy settings, although they might hint at starting to execute some form of shift early next year...

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