On Friday, the dollar experienced a decline, reaching its lowest point this year against the yen, while gold achieved a record high following a significant overnight shift in investor sentiment regarding a potential substantial interest rate cut by the Federal Reserve next week.

Stocks, Treasury prices, and commodities all surged as traders increased the likelihood of a half-point rate cut from the Fed to 41%, up from approximately 14% the previous day, after articles in the Financial Times and Wall Street Journal described the decision as "a close call."

Former New York Fed President Bill Dudley, speaking at a forum in Singapore, stated, "there's a strong case for 50."

City Index market strategist Fiona Cincotta remarked, "I had been firmly in the 25-basis point camp until now. This is actually making me think they might go 50."

She added, "It feels like a coin toss now, which is reflected in the market's reactions in bonds, the yen, the U.S. dollar, and gold." The dollar fell by as much as 0.97% to 140.415 yen, marking its weakest level since December 28 of last year, and was last down 0.77% at 140.68.

The yen has also gained support this week from hawkish remarks by Bank of Japan officials, with policy board member Naoki Tamura expressing concerns about rising inflation risks.

The dollar index, which gauges the currency against the yen and five other major currencies, dropped to a one-week low of 101.00.

Benchmark 10-year Treasuries saw a rally, resulting in a 4.2 basis point decrease in yields to 3.638%, while two-year yields, sensitive to interest rate changes, fell by 6.8 basis points to 3.585%.

Commonwealth Bank of Australia strategist Carol Kong noted that the current market pricing for Federal Open Market Committee (FOMC) easing is overly optimistic.

"We continue to favor a 25 basis point cut over a 50 basis point cut, as the labor market and the broader economy remain resilient," she stated in a note.

"Current market pricing is aggressive compared to the average FOMC rate-cutting cycle outside of recessions. We, along with the consensus of U.S. economists, do not anticipate a recession in the U.S. economy."

Global equities experienced a fifth consecutive day of increases, rising by 0.2%, largely driven by positive performance in Europe, where the STOXX 600 index surged by 0.4%, positioning itself for a weekly gain of 2.6%, the highest in a month.

The euro appreciated by 0.13% to $1.1087, building on Thursday's 0.57% increase, following comments from European Central Bank President Christine Lagarde, who tempered expectations for an interest rate cut in October after a widely anticipated quarter-point reduction on Thursday.

Gold is on track for its most significant weekly increase since mid-August, climbing 2.8% to a record high of $2,570 per ounce, fueled by a weakening dollar, and was last seen up 0.4% at $2,568 per ounce.

The MSCI index tracking Asia-Pacific shares outside Japan rose by 0.53%. Japan, mainland China, and South Korea are entering extended weekends, with Tokyo reopening on Tuesday, China on Wednesday, and South Korea on Thursday. U.S. stock futures increased by 0.1%, following gains in the cash indexes on Thursday.

Crude oil prices continued to rise after a nearly 2% surge overnight, as producers evaluated the impact on production following Hurricane Francine's passage through the Gulf of Mexico. U.S. West Texas Intermediate crude futures climbed 0.51% to $69.32 per barrel, extending Thursday's 2.5% increase, while Brent crude futures rose 0.5% to $72.30 after a 1.9% rise the previous day.