MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.53%
The dollar on Friday plunged against the yen while gold reached an all-time high as investors raised bets for a super-sized Fed interest rate cut next week after media reports indicated the decision was a tough one for officials.
Shares in Asia also gained after traders raised bets back to 41% for a 50 bp U.S. rate cut on September 18, as per LSEG data at 0155 GMT, from nearly 28% before articles in the Financial Times and Wall Street Journal each called the decision “a close call”.
This is yet another twist in the Fed rate cut debate, said Tony Sycamore, an analyst at IG, noting the tug-of-war being played out in bond futures and the dollar-yen rate in particular.
Everybody thought we were back on track for 25 bps, and now 50 is suddenly back on the table, he said.
The dollar declined 0.41% to 141.225 yen, heading back towards Wednesday’s low at 140.71, the weakest level this year.
The yen has also been supported this week by hawkish comments from BoJ officials, with policy board member Naoki Tamura on Thursday saying he was worried that upside inflation risk was heightening.
The dollar index slipped to a one-week low at 101.03.
The euro advanced 0.09% to $1.1084, building on Thursday’s 0.57% gain after ECB President Christine Lagarde pushed back on prospects of a rate cut in October, following a widely expected quarter-point cut on Thursday.
Gold extended Thursday’s 1.9% jump to hit a new record high of $2,567.93, buoyed by the dollar’s weakness.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.53%.
Hong Kong’s Hang Seng led gains in markets, adding 1.13%. Mainland Chinese blue chips advanced 0.24%. Australia’s benchmark jumped 0.31%. South Korea’s Kospi was flat.
Japanese stocks underperformed, though, dragged lower by the stronger yen, with the Nikkei declining 0.48%.
Crude oil continued to jump after soaring nearly 2% overnight, as producers assessed the impact on output after Hurricane Francine tore through the Gulf of Mexico.
