Dollar drops to 2-week low on US rate cut bets

The US dollar fell on Wednesday, to deepen losses for the fourth straight day, and hit a 2-week low, as treasury yields slumped, and the market's bets rose for the US Fed to cut interest rates in its June meeting.

The dollar index fell against a basket of major currencies by more than 0.1% to 98.80 points, after it opened at 98.91 and hit an intraday high of 99.02.

The US dollar fell by 0.3% yesterday, its third straight daily loss, due to the release of lower-than-expected US consumer confidence reading for February and a drop in US bond yields.

The US 10-year treasury yields fell today, to a record low of 1.30% which weighs down on the US dollar.

Accordingly, the US interest rate futures are now fully priced for the prospects of the Fed to cut rates at the next June meeting by 25 basis points, which were at only 50% a week ago.

These developments about the expected US interest rate came despite Fed officials avoiding any hints about the monetary policy, as FOMC member Richard Clarida stated on Tuesday that the bank is monitoring the coronavirus situation, but it is still too early to judge if the current policy is appropriate or not.