Forex Today: BoE policy decisions, US data to keep volatility going

Here is what you need to know on Thursday, August 3:

Safe-haven flows continue to dominate the financial markets on Thursday, allowing the US Dollar to preserve its strength. The Bank of England (BoE) will announce the interest rate decision and BoE Governor Andrew Bailey will deliver a statement on the policy outlook and respond to questions from the press. Later in the day, the weekly Initial Jobless Claims, second-quarter Unit Labor Costs and ISM Services PMI survey for July will be featured in the US economic docket.

The US Dollar Index, which tracks the USD's performance against its major rivals, registered strong gains on Wednesday and continued to push higher toward 103.00 early Thursday, touching its highest level in nearly a month. Wall Street's main indexes suffered heavy losses on Wednesday following the downgrade of US credit rating. In the European session, US stock index futures are down between 0.4% and 0.6%, reflecting the sour market mood.

The BoE is widely expected to raise its policy rate by 25 basis points to 5.25%. Softening inflation, worsening economic outlook and tightening conditions in the labour market, however, put the BoE in a tough spot regarding future policy steps. At the time of press, GBP/USD was trading modestly lower on the day a few pips below 1.2700.

BoE Interest Rate Decision Preview: Stuck between high inflation and gloomy outlook.

EUR/USD closed the third straight day in negative territory and stretched lower toward 1.0900 early Thursday.

During the Asian trading hours, the Bank of Japan (BoJ) reportedly intervened in the bond market and purchased an unlimited amount of 5 to 10-year JGBs to stem the incline in the yield curve.after the benchmark Japanese government bond yield hit a fresh 9-year high near 0.65%. USD/JPY rose toward 144.00 in the Asian session but came under heavy bearish pressure in the European morning. As of writing, the pair was trading in negative territory at around 143.00.

Pressured by surging US Treasury bond yields after the upbeat ADP private sector employment data on Wednesday, gold price declined sharply. After touching a multi-week low at $1,930 early Thursday, XAU/USD staged a rebound toward $1,940.

Bitcoin failed to build on Tuesday's recovery gains and lost nearly 2% on Wednesday. BTC/USD stays on the back foot and trades slightly below $29,000 in the European session. Similarly, Ethereum declined 1.8% on Wednesday and continued to push lower in the Asian session. ETH/USD was last seen losing more than 0.5% on the day at $1,825.