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The dollar fell against the yen on Friday, while gold reached a record high as expectations for a substantial Federal Reserve rate cut increased.
Reports from the Financial Times and Wall Street Journal indicated that the Fed’s decision for next week is on a knife edge, prompting traders to ramp up their bets for a 50-basis point cut to 41%, up from 28% earlier, according to LSEG data.
Image Source: Reuters
Asian shares also saw gains, with Hong Kong’s Hang Seng leading the region, rising 1.13%. Mainland Chinese blue chips added 0.24%, and Australia’s benchmark rose 0.31%. However, Japanese stocks underperformed, dragged down by the stronger yen, with the Nikkei falling 0.48%.
“This is yet another twist in the (Fed rate cut) debate,” said Tony Sycamore, an analyst at IG, highlighting the renewed uncertainty in bond futures and the dollar-yen exchange rate. “Everybody thought we were back on track for 25 basis points, and now 50 is suddenly back on the table.”
The dollar weakened by 0.41% against the yen, reaching 141.225 yen and nearing Wednesday’s low of 140.71, its weakest level this year. The yen has been supported by hawkish remarks from Bank of Japan officials, including policy board member Naoki Tamura, who expressed concerns over rising inflation risks.
The dollar index, which measures the greenback against six major currencies, dropped to a one-week low of 101.03. Meanwhile, the euro strengthened by 0.09% to USD 1.1084, extending Thursday’s 0.57% gain after European Central Bank President Christine Lagarde dismissed the likelihood of a rate cut in October, following a quarter-point reduction on Thursday.
Gold At Record High
Image Source: The Edge Malaysia
Gold continued its upward trajectory, extending Thursday’s 1.9% rise to reach a new record high of USD 2,567.93, fueled by the dollar’s weakness.
In commodities, crude oil prices continued to climb as producers assessed the impact of Hurricane Francine on Gulf of Mexico output. U.S. West Texas Intermediate crude futures rose 0.54% to USD 69.34 per barrel, building on Thursday’s 2.5% gain, while Brent crude futures increased by 0.47% to USD 72.31, following a 1.9% jump in the previous session.
As markets look ahead, Japan, China, and South Korea are preparing for long weekends, with Japanese markets reopening on Tuesday, Chinese markets on Wednesday, and South Korean markets on Thursday. U.S. stock futures remained flat after Thursday’s gains in the cash indexes.
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