TOKYO, Sept 13 (Askume) – The dollar fell to its lowest this year against the yen on Friday while gold hit a record high, as investors expected a sharp interest rate cut from the Federal Reserve next week.
Asian shares also rose after traders raised their bets on a 50 basis point US interest rate cut to 45% on September 18, according to London Stock Exchange Group (LSEG) data at 0510 GMT, while Financial Times and The Wall Street Journal articles reported bets were around 28%.
Bill Dudley, the influential former president of the Federal Reserve Bank of New York, later told a forum in Singapore that there was “a strong case for 50.”
“This is another turning point in the (Fed rate cut) debate,” said IG analyst Tony Sycamore, pointing to the ongoing tug-of-war in bond futures and the dollar-yen exchange rate in particular.
“Everybody thought we were back to 25 basis points, and now all of a sudden we’re back to 50 basis points.”
The dollar fell 0.81% to 140.645 against the yen, its lowest since Dec. 28.
The yen has also been supported by dovish comments from Bank of Japan officials this week, with policy committee member Naoki Tamura saying on Thursday he was “concerned that inflation risks are rising.”
The dollar index, which measures the currency against the yen and five other major rivals, fell to a one-week low of 101.00.
Commonwealth Bank of Australia strategist Carol Kong said the current Federal Open Market Committee (FOMC) easy policy is too much.
“We favor a 25 basis point rate cut rather than a 50 basis point cut as the labor market and overall economy remain resilient,” they wrote in a note.
“The market is currently pricing in a more aggressive FOMC rate cut cycle than the average Federal Open Market Committee (FOMC) rate cut cycle, out of a recession. We are consistent with the consensus among US economists that we do not expect the US economy to enter a recession.”
The euro rose 0.07% to $1.1083 after European Central Bank President Christine Lagarde delivered a widely expected 25 basis point interest rate cut on Thursday.rejected.
Gold prices rose 1.9% to a new record high of $2,570.03 on Thursday due to a weaker dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.48%.
Hong Kong’s Hang Seng Index (.HSI) led the regional gain, gaining 0.94% . Mainland China’s blue-chip stocks (.CSI300) rose 0.09% despite expectations of more weak economic data on Saturday .
Australia’s benchmark index (.AXJO) rose 0.25%. South Korea’s composite stock index (.KS11) fell 0.1%.
Japanese shares underperformed, however, as the yen strengthened, with the Nikkei (.N225) down 0.35%.
Japan, China and South Korea are all heading for long weekends, with Tokyo on Tuesday, China on Wednesday and South Korea on Thursday.
US stock index futures rose 0.1%, following a gain in the spot index on Thursday.
Pan-European Stoxx 50 futures rose 0.42%.
Crude oil prices continued to rise after rising nearly 2% overnight as producers assessed the impact on output after Hurricane Francine hit the Gulf of Mexico .
US West Texas Intermediate crude futures rose 0.71% to $69.46 a barrel, building on Thursday’s 2.5% gain. Brent crude futures rose 0.65% to $72.44 after rising 1.9% in the previous session.
