Market bets on a more dovish Fed

The gulf between where the Federal Reserve projects interest rates will be by the end of 2026 and the more aggressive cutting financial markets expect by then is partly due to the expectation that U.S. central bank chief Jerome Powell will be replaced by somebody more dovish next year, investors said.

A battered dollar is taking another beating as investors, unnerved by fresh signs of an erosion in U.S. central bank independence, waste no time in pushing the greenback back to its lowest levels in over three years.