Dollar weakens further as rate cut bets build, but equities mixed

NEW YORK - The dollar extended losses on Wednesday as traders ramped up bets on the Federal Reserve cutting interest rates in the new year after officials sounded optimistic notes on the battle against inflation.

However, equity markets were mixed following another tepid performance on Wall Street, with focus on the release of the central bank's favoured gauge of prices coming up later in the week.

A string of indicators in recent weeks has indicated the US jobs market is softening and the economy slowing down -- but not quickly enough to cause much concern about a recession.

That has encouraged investors to shift back into risk assets, though the latest advance has been tempered by profit-taking ahead of what many hope will be a "Santa rally".

Data shows traders are now betting the Fed will cut rates in June, while they have priced an 80 percent chance of such a move in May, according to Bloomberg News. 

Still, some analysts pointed out that Fed officials have alluded to higher Treasury yields acting as a substitute for further rate hikes, making it easier to pause, but falling yields were taking away that crutch.

Equity markets struggled for traction ahead of the week's key data release -- the personal consumption expenditures (PCE), which is the Fed's preferred guide for inflation. 

Tokyo, Sydney, Seoul, Wellington, Taipei and Jakarta all rose, but Hong Kong, Shanghai, Seoul and Manila slipped.

That came after another unremarkable day on Wall Street, even as data showed US consumer confidence rose more than expected this month and a separate report pointed to healthy sales over the five-day shopping weekend that includes Black Friday.