Dollar Plummets as Gold Reaches New Heights Amid Fed Rate Speculation

The dollar dropped to its lowest point against the yen this year while gold achieved a record high. This shift was driven by heightened investor expectations for a significant Federal Reserve interest rate cut. Stocks, Treasury prices, and commodities rallied, signaling uncertainty in the financial markets.

The dollar plummeted on Friday to its lowest level this year against the yen, while gold prices hit a record high. The movement comes after a dramatic overnight shift in investor expectations, anticipating a substantial Federal Reserve interest rate cut next week.

Investor sentiment shifted significantly, with the likelihood of a half-point cut by the Fed next week rising from 14% to 41% in a single day, spurred by reports from the Financial Times and Wall Street Journal. Influential figures such as former New York Fed President Bill Dudley have hinted at a potential 50-basis point cut, contradicting previous expectations.

The dollar fell as much as 0.97% against the yen, its weakest since December last year. Concurrently, benchmark 10-year Treasuries rallied, and global shares marked a fifth straight day of gains. Commodities also rallied, with crude oil prices continuing their ascent after a significant overnight surge.

(With inputs from agencies.)