-- The dollar fell, resuming this month’s downtrend, as traders debated the size of a potential Federal Reserve interest-rate cut later Wednesday. Japanese shares rose.Bloomberg’s dollar index dropped for the fifth time in six days as market-implied odds put the chance of a half-point Fed rate cut Wednesday at just over 50%. The central bank will also release its long-term dot-plot forecasts with the decision, and Chair Jerome Powell will hold a press conference.
The crucial thing for traders is investors’reaction to the Fed decision. Will a 25 basis-point cut leave them worried the Fed is behind the curve, or will a 50 basis-point move spook markets into thinking policymakers must know the economy is in worse shape than most currently believe? “It will be valuable to hear Powell’s thoughts on the expected path of rate cuts — in particular, what conditions could trigger a change of course, either a moderation or acceleration in easing,” she said.
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