NEW YORK, June 25 — The dollar softened against a basket of currencies yesterday on bets the US Federal Reserve may lower interest rates more than once this year, while tensions between Iran and the United States provided safe-haven support for the yen.

Bitcoin extended its torrid weekend run, when it broke above US$11,000 (45,545.50) for the first time since March 2018.

The world’s biggest and best-known cryptocurrency has risen nearly 200 per cent this year as Facebook’s plan to introduce its Libra digital coin stoked optimism about widening usage of virtual currencies.

Investors awaited whether US President Donald Trump and China President Xi Jinping would at least call a truce in their trade war at the G20 summit in Japan later this week.

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“Today’s session is wedged between the Fed’s dovish turn last week and the G20 later this week,” said Brian Daingerfield, head of G10 FX strategy, Americas in Stamford, Connecticut.

“With the G20, it’s hard to have confidence in the direction for the market.” Markets believe that if Washington and Beijing fail to dial back their heated rhetoric on trade, then the Fed will be forced to cut interest rates to prevent a wider economic slowdown resulting from higher US tariffs on imports.

Both China and the United States should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said yesterday.

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Interest rates futures implied traders priced in a 100 per cent chance the Fed would cut rates at the end of July, while they are betting on a high probability it might lower rates two more times after that, according to CME Group’s FedWatch programme.

Expectations of falling US rates have weakened the greenback. An index that tracks the dollar against a group of six currencies fell 1.57 per cent last week, its biggest weekly loss in four months.

At 2.57pm (1857 GMT), the dollar index dipped 0.24 per cent at 95.985. The latest weekly positioning data confirmed the view of a weakening dollar.

Hedge funds have turned mildly bearish on the greenback, and have increased bets on weakness in other currencies such as the Australian dollar as their outlook on the global economy has soured.

Meanwhile, the yen retreated from its strongest levels against the dollar since January after Trump called off a US military strike against Iran last week, but tensions between the two nations remain high.

Trump yesterday imposed new sanctions on Iran in a bid to curb its nuclear programme.

The yen was steady at 107.31 per dollar after reaching 107.045 on Friday as nervous traders piled into the safe-haven currency.

Among digital currencies, bitcoin rose 1.44 per cent to US$10,987.81 on the Luxembourg-based Bitstamp exchange. — Reuters