- The US dollar closed lower on Friday to its lowest level in almost nine months against the Japanese yen after media reports once again fueled speculation that the Federal Reserve will cut interest rates by 50 basis points at its policy meeting next week.
- Analysts said reports by the Wall Street Journal and Financial Times late on Thursday that a 50bp rate cut was still an option, and comments from former Fed officials supporting a large rate cut, caused a shift in market expectations.
- Gold rose around $2,580 an ounce on Friday, hitting a new record high amid a weaker dollar and lower bond yields. The rise followed fresh economic data that raised expectations for more aggressive Federal Reserve action when interest rates are cut next week.
- In Europe, the ECB cut interest rates by 25 basis points as expected, reflecting growing confidence among policymakers that inflation is on a sustained downward path.
- Oil prices fell on Friday as U.S. crude production in the Gulf of Mexico resumed after Hurricane Francine and data showed a weekly increase in the U.S. rig count.
- Brent crude futures settled at $71.61 a barrel, down 36 cents, or 0.5%. U.S. West Texas Intermediate (WTI) crude settled at $68.65 a barrel, down 32 cents, or 0.5%.
- Wall Street’s major indexes closed higher on Friday as investors priced in the odds of a larger interest rate cut by the Federal Reserve next week, with interest-sensitive small-cap stocks outperforming.
- Expectations for the size of the Fed’s rate cut remained volatile and were roughly even late Friday. Expectations for a 50 basis point rate cut jumped to 49% from 28% on Thursday, according to the CME FedWatch Tool, which indicated a 51% probability of a 25 basis point rate cut.
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