Bitcoin surged to one-month highs on Monday, continuing its rally following the Federal Reserve’s aggressive 50 basis point rate cut last week. While the yen and most other major currencies stagnated due to Japan’s Autumnal Equinox holiday, Bitcoin rose by 0.8%, trading above $63,200.
Meanwhile, the dollar strengthened against the yen, hitting a two-week high of 144.50 yen after both U.S. and Japanese central bank meetings. The Bank of Japan (BOJ) left interest rates unchanged, signaling no rush to raise them, which halted the yen’s sharp gains this month. Despite that, the yen remains up 1.4% for September.
With Japan’s markets closed, investor attention shifted to potential future Fed rate cuts, driving gains in equities, commodity currencies, and other risk assets. The Australian dollar held steady at around $0.68, after climbing over 3% in just under two weeks.
The U.S. dollar index also edged up to 100.8, staying above last week’s one-year low. Goldman Sachs noted that the Fed’s rate cut has “calmed market fears of a U.S. recession.” They predict a short-term rebound for the dollar over the next three months, followed by a gradual easing over six to twelve months.
Fed futures traders are now pricing in 75 basis points in additional rate cuts by year-end, with further cuts anticipated through 2025, potentially bringing the Fed’s policy rate down to 2.75% by December 2025. The U.S. Treasury yield curve has steepened after the Fed’s recent cut, with investors betting on another significant reduction following concerns from Fed Governor Christopher Waller that inflation may soon dip below the central bank’s 2% target.