Forex Today: Will the BoE dare?

The unexpected rate hike by the BoJ surprised the FX world on Wednesday, while the Fed left its policy rate unchanged, although it signaled a potential rate cut in September. Next on tap comes the BoE, with odds split regarding a probable rate reduction.

Here is what you need to know on Thursday, August 1:

The USD Index (DXY) suffered the BoJ-driven strength in the Japanese yen and the somewhat dovish message from Chief Powell after the Fed left rates unchanged, as anticipated. On August 1, the ISM Manufacturing PMI takes centre stage along with usual Initial Jobless Claims, Construction Spending and the final S&P Global Manufacturing PMI.

EUR/USD reversed part of the weekly retracement, revisiting once again the 1.0850 region. The final HCOB Manufacturing PMI in Germany and the EMU are due on August 1 seconded by the ECB Economic Bulletin and the Unemployment Rate in the euro bloc.

GBP/USD printed modest gains around 1.2850 amidst steady prudence pre-BoE and the weaker Dollar. On August 1, the BoE will decide on its policy rate. Additionally on the UK calendar, Nationwide Housing Prices are due followed by the final S&P Global Manufacturing PMI.

The surprising rate hike by the BoJ prompted USD/JPY to retreat sharply and breach the key 150.00 support, printing fresh four-month lows. On August 1, the only release of note in Japan will be the weekly Foreign Bond Investment figures.

AUD/USD lost further ground and broke below the 0.6500 support, opening the door to further losses in the very near term. The final Judo Bank Manufacturing PMI is expected on August 1 along with the Balance of Trade figures.

Finally, some respite for WTI prices came on the back of rising geopolitical concerns and another drop in weekly US crude oil inventories, all lifting prices back to the vicinity of the $78.00 mark per barrel.

Prices of Gold added to Tuesday’s advance and retested the $2,440 region per ounce troy. Silver followed suit, posting gains for the second straight session and approaching the $29.00 mark per ounce.