Forex Today: Yen jumps amid speculations of a tweak at the BoJ; Dollar rallies on US data


According to media reports, the Bank of Japan will discuss making a tweak to its yield curve control (YCC) on Friday; the BoJ meeting will be the highlight of the Asian session. The Tokyo Consumer Price Index is due, and in Australia, the Producer Price Index. Later in the day, attention will turn to preliminary inflation figures from France, Spain, and Germany. The US will also release inflation data, including the Core Personal Consumption Expenditure (PCE) index.

Here is what you need to know on Friday, July 28:

Upbeat economic data from the US boosted the US dollar on Thursday. The economy expanded at a 2.4% annualized rate, above the expected 1.8% and also higher than the 2% of market consensus. Additionally, Initial Jobless Claims, Durable Goods Orders, and Pending Home Sales posted better-than-expected readings. Wall Street initially cheered the data, but main indices failed to hold onto gains and finished with losses of 0.60% on average. 

The US Dollar Index jumped to 101.85, reaching the highest level since July 11 but then pulled back on the back of the USD/JPY decline. US Treasury yields also rose, with the 10-year rising above 4.0% and the 2-year hitting 4.95%

On Friday, the US Core Personal Consumption Expenditure index for June is due. The annual rate is expected to decline from 4.6% to 4.2%. It is the Fed's preferred inflation gauge. Also due are income and spending data, the Employment Cost Index, and the final University of Michigan Consumer Sentiment index. Next week, the official US employment report is due.

The Japanese Yen rose sharply during the American session and became the biggest gainer of the day. Nikkei reported that the Bank of Japan (BoJ) will discuss a tweak in its Yield Curve Control policy to allow rates over 0.5%. USD/JPY tumbled from above 141.00 to 138.80 in a few hours. The BoJ will have its monetary policy meeting on Friday, which gained attention following recent speculations. The Tokyo Consumer Price Index (CPI) is also due.

The Euro weakened after the European Central Bank (ECB) decision to raise rates by 25 basis points, as expected. The fact that Lagarde offered no forward guidance and kept all options on the table for the next meeting in September weighed on the common currency. The key driver in EUR/USD, however, was the stronger US dollar. Spain, France, and Germany will release the preliminary July Consumer Price Index. EUR/USD tumbled to 1.0960, having its worst day in months.

 Jörg Krämer, Chief Economist at Commerzbank:

The ECB switched off the autopilot at today's Council meeting. From now on the data will determine whether the ECB raises its interest rates again or not. Because we expect a significant decline in inflation and a recession in the second half of the year, we continue to not forecast a rate hike in September. On the other hand, we doubt the market's view that the ECB will cut rates as early as 2024.

GBP/USD resumed the downside, falling below 1.2800 to the lowest level in three weeks. EUR/GBP bottomed at 0.8545 but then erased losses, rising to 0.8575.

USD/CAD rose, boosted by the Greenback, and hit weekly highs at 1.3245 but still remains capped by the 1.3250 resistance zone. On Friday, Canada's monthly GDP for May is due, with a 0.3% expansion expected.

NZD/USD retreated a hundred pips from the top and closed below 0.6200. AUD/USD posted its lowest close since July 11, near 0.6700 and below the 20-day Simple Moving Average (SMA). Both currency pairs are under pressure amid stronger Dollar and technicals. Australia will release the Producer Price Index on Friday.

Metals collapsed following the US data. Silver lost more than 3%, falling to $24.00, and Gold plummeted from $1,980 to $1,942. Cryptocurrencies also suffered from a stronger dollar, with Bitcoin falling 1.60% to $29,100 and Ethereum 1.24% to $1,858.



 


Like this article? Help us with some feedback by answering this survey:

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: Next on the downside comes 0.6500

AUD/USD: Next on the downside comes 0.6500

Further gains in the US Dollar kept the price action in commodities and the risk complex depressed on Tuesday, motivating AUD/USD to come close to the rea of the November low near 0.6500.

AUD/USD News
EUR/USD: No respite to the sell-off ahead of US CPI

EUR/USD: No respite to the sell-off ahead of US CPI

The rally in the Greenback remained well and sound for yet another session, weighing on the risk-linked assets and sending EUR/USD to new 2024 lows in the vicinity of 1.0590 prior to key US data releases.
 

EUR/USD News
Gold struggles to retain the $2,600 mark

Gold struggles to retain the $2,600 mark

Following the early breakdown of the key $2,600 mark, prices of Gold now manages to regain some composure and reclaim the $2,600 level and beyond amidst the persistent move higher in the US Dollar and the rebound in US yields.

Gold News
SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT

SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT

Solana price retraced 7% from $225 to $205 on Tuesday, halting a seven-day winning streak that saw SOL become the third-largest cryptocurrency by market capitalization.

Read more
Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out

Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out Premium

What a week – the US election lived up to their hype, at least when it comes to market volatility. There is no time to rest, with politics, geopolitics, and economic data promising more volatility ahead.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures