FOREX-US dollar hits more than one-year low as market eyes aggressive Fed rate cut

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      Fed likely to begin cutting rates after policy meeting


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      Traders pricing in 60% chance of 50 bp cut


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      BOJ, BoE expected to hold rates later this week



 (Updates first paragraph and headline, adds analyst comment)
    By Chibuike Oguh and Samuel Indyk
       NEW YORK/LONDON, Sept 16 (Reuters) - The U.S. dollar
fell to a more than one-year low versus the yen on Monday, as
expectations increased that the Federal Reserve could deliver a
supersized cut to interest rates later this week.
    The Fed had been widely expected to announce at least a
25-basis-point cut to interest rates at the conclusion of its
Sept. 17-18 meeting.
    But reports by the Wall Street Journal and Financial Times
last week sparked speculation among traders that the central
bank could deliver a more aggressive 50 bp cut.
    Futures markets are pricing in a 61% chance of a 50 bp cut,
up from around 15% last week.
    "There's only really one story today and that is a
continuation of what we saw last week: after the CPI, the market
was comfortable with a 25 basis point rate hike but many people
suspect the Fed planted a story to put 50 basis points back on
the table," said Marc Chandler, chief market strategist at
Bannockburn Global Forex in New York.
   "The markets have responded accordingly. And in fact, they're
continuing to adjust."
    The dollar traded as low as 139.58 yen in Asia
hours. That represented a further drop from the 140.285
end-of-December low struck on Friday to levels last seen in July
2023. It was last down 0.10% at 140.695 yen.
    The dollar index, which measures the currency against
six others including the euro, yen and pound, was down 0.31% to
100.70.
    U.S. Treasury yields have been falling in the run-up to the
highly anticipated Fed meeting, particularly as odds stack up
for a half-point rate cut.
    Benchmark 10-year yields are down 30 basis
points in about two weeks. Two-year yields, more
closely linked to monetary policy expectations, were around
3.571% and down from roughly 3.94% two weeks ago.
    Investors are also looking to the Bank of Japan's interest
rate decision on Friday, when it is expected to keep its
short-term policy rate target steady at 0.25%, having raised
rates twice already this year.
    BOJ board members have indicated they are keen to see rates
higher, and the narrowing gap between rates in Japan and other
major currencies has spurred the yen higher and caused billions
of dollars worth of yen-funded carry trades to be unwound.
    Sterling rose 0.58% to $1.3200. The euro was
 up 0.47% at $1.1128.
    The European Central Bank cut interest rates by 25 bps last
week, but ECB President Christine Lagarde dampened expectations
for another reduction in borrowing costs next month.
    The ECB should almost certainly wait until December before
cutting interest rates again to be certain it is not making a
policy mistake in easing too quickly, ECB Governing Council
member Peter Kazimir said on Monday.
    The Bank of England is expected to hold its key interest
rate at 5% on Thursday, after kicking off its easing with a
25-bp reduction in August. Futures markets were pricing in
around a  38% chance of a quarter-point rate cut on Thursday,
versus a 20% chance on Friday.

 Currency bid prices at 16 September? 02:15
 p.m. GMT
 Description                                  RIC        Last      U.S. Close Previous Session  Pct Change  YTD Pct  High Bid  Low Bid
 Dollar index                                            100.71    101.02                       -0.31%      -0.65%   101.01    100.58
 Euro/Dollar                                             1.1125    1.1076                       0.45%       0.79%    $1.1138   $1.1077
 Dollar/Yen                                              140.54    140.87                       -0.18%      -0.3%    140.81    139.64
 Euro/Yen                                                1.1125?   155.97                       0.25%       0.47%    156.5     155.16
 Dollar/Swiss                                            0.8447    0.8489                       -0.48%      0.38%    0.8487    0.8436
 Sterling/Dollar                                         1.3204    1.3125                       0.61%       3.77%    $1.3214   $1.3126?
 Dollar/Canadian                                         1.3588    1.3586                       0.04%       2.53%    1.3602    1.3568
 Aussie/Dollar                                           0.674     0.6705                       0.52%       -1.15%   $0.6749   $0.67
 Euro/Swiss                                              0.9396    0.94                         -0.04%      1.2%     0.9407    0.9384
 Euro/Sterling                                           0.8425    0.8438                       -0.15%      -2.8%    0.8443    0.8424
 NZ Dollar/Dollar                                        0.6185    0.6159                       0.44%       -2.11%   $0.6199   0.6155
 Dollar/Norway                                           10.6042?  10.634                       -0.28%      4.63%    10.6423   10.579
 Euro/Norway                                             11.7988   11.7914                      0.06%       5.12%    11.8003   11.7721
 Dollar/Sweden                                           10.1909   10.2097                      -0.18%      1.23%    10.2405   10.1654
 Euro/Sweden                                             11.3384   11.3172                      0.19%       1.92%    11.3395   11.306




 (Reporting by Chibuike Oguh in New York and Vidya Ranganathan
and Samuel Indyk in London; Editing by Kirsten Donovan)