Forex Today: Japanese Yen weakens on BoJ headlines, USD extends weekly rebound

Eren Sengezer FXStreet

Here is what you need to know on Friday, July 21:

The Japanese Yen stays under strong selling pressure on Friday on reports claiming the Bank of Japan (BoJ) will not make any changes to its yield curve control strategy next week. The US Dollar Index continues to stretch higher following Thursday's strong recovery amid a cautious market stance. June Retail Sales from Canada will be the only data releases featured in the economic calendar ahead of the weekend.

Citing five sources familiar with the matter, Reuters reported on Friday that the BoJ was leaning toward maintaining its yield curve control (YCC) strategy at next week's policy meeting. With the initial reaction to this headline, USD/JPY gathered bullish momentum and climbed to its highest level in 10 days above 141.50. Meanwhile, the data from Japan showed earlier that the National Consumer Price Index (CPI) edged higher to 3.3% on a yearly basis in June from 3.2% in May. This reading came in lower than the market expectation of 3.5%. Reflecting the broad-based JPY weakness, EUR/JPY was last seen rising more than 1% on the day at 157.55 and GBP/JPY was up 1.1% at 182.25.

EUR/USD lost nearly 100 pips on Thursday and touched its weakest level in over a week below 1.1120. Early Friday, the pair stays finds its difficult to stage a rebound and fluctuates in a tight channel above 1.2100.

GBP/USD closed the fifth straight day in negative territory on Thursday and the pair is already down nearly 2% this week. The UK's Office for National Statistics reported on Friday that Retail Sales rose 0.7% on a monthly basis in June, much higher than the market expectation for an increase of 0.2%. In the meantime, UK Finance Minister Jeremy Hunt said that they will start to see results if they stick to their plan of halving inflation. GBP/USD showed no reaction to these comments and was last seen trading modestly lower on the day at around 1.2850.

Pressured by rising US Treasury bond yields, Gold price lost its bullish momentum and closed in the red on Thursday. Early Friday, XAU/USD stays under bearish pressure and continues to edge lower toward $1,960.

Bitcoin rose above $30,000 on Thursday but failed to make a daily close there. Early Friday, BTC/USD trades flat on the day at around $29,800. Ethereum is struggling to make a decisive move in either direction and extending its sideways action near $1,900 ahead of the weekend.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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