Dollar Edges Higher Amid Fed Rate Cut Speculations

The dollar witnessed a modest rise on Friday, bouncing back from Thursday's decline. Market activity was influenced by a notable increase in U.S. jobless claims and an incremental rise in inflation. Investors are anticipating a likely rate cut by the Federal Reserve next week, keeping financial sentiment mixed.

Economic data exposed an undercurrent of uncertainty, with the rising number of new jobless claims overshadowing inflation figures. Nonetheless, the Federal Reserve's impending policy review remains the focal point for investors, who mainly foresee a 25 basis point cut. Rate cut expectations, however, have dimmed regarding a larger reduction.

Amid these movements, the euro stabilized, the sterling saw a slight drop with stagnant UK economic data, and the yen was bolstered by a U.S.-Japan announcement against disorderly exchange rate volatility. Meanwhile, the Australian dollar hovered close to a 10-month high, reflecting regional currencies' varied responses to global fiscal shifts.

(With inputs from agencies.)