Forex Today: No changes expected from the BoJ

Pablo Piovano FXStreet

The US Dollar (USD) clocked marked gains on Thursday, as market participants parsed Wednesday’s rate cut by the Federal Reserve and the cautious message from Chair Powell at his subsequent press conference.

Here's what to watch on Friday, September 19:

The US Dollar Index (DXY) added to Wednesday’s post-Fed bounce, challenging three-day peaks near the 97.60 level. The Chicago Fed National Activity Index and speeches by the Fed’s Musalem and Hammack are due on September 22.

EUR/USD further extended its correction from Wednesday’s highs, slipping back to the 1.1750 area, or three-day lows. Germany’s Producer Prices are due, seconded by speeches by the ECB’s Montagner and Tuominen and the EuroGroup and ECOFIN meetings.

GBP/USD retreated to weekly troughs in the 1.3530 zone, adding to Wednesday’s pullback as investors digested the BoE’s rate decision. The GfK Consumer Confidence will be released seconded by Retail Sales and Public Sector Net Borrowing.

USD/JPY gained momentum and surged to eight-day highs, successfully breaching the 148.00 barrier. The BoJ is broadly expected to keep its interest rate unchanged at 0.50%. In addition, the Japanese docket will feature the Inflation Rate and weekly Foreign Bond Investment figures.

AUD/USD added to the previous day’s pullback and retreated to weekly lows near the 0.6600 neighbourhood. Next on tap in Oz will be the flash S&P Global Manufacturing and Services PMIs on September 23.

Prices of WTI receded modestly on Thursday, reaching two-day lows near the $63.00 mark per barrel in response to reignited concerns over the health of the US economy.

Gold prices flirted with weekly troughs below the $3,630 mark per troy ounce following the sharp rebound in the Greenback and higher US yields. Silver prices dropped for the third straight day, revisiting the vicinity of the $41.00 mark per ounce.

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Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.