BOJ September hike talk sent the U.S. dollar lower at the North American open on Friday, with the greenback falling against all major currencies and USDJPY moving down.
The New Zealand dollar led the gains, rising 0.62% against the U.S. dollar. Meanwhile, sterling added 0.39%, the Canadian dollar gained 0.37%, the euro rose 0.35%, and the yen advanced 0.22%. As a result, EURUSD and GBPUSD moved higher, while USDJPY fell.
Reports on the Bank of Japan drew much of the market’s focus. According to the article, the BOJ could raise rates at its September 17-18 meeting and may speed up tightening after that. Reuters reported that markets now price in nearly an 80% chance of a September increase.
BOJ September Hike in Focus
USDJPY first dropped to about 159.15 from around 159.32 after the report. However, the pair later trimmed part of that move. The article said higher BOJ rates may not ensure a lasting yen rally, even with rising pressure from inflation concerns and continued yen weakness.
The source also said the BOJ has been raising rates at a pace of about twice a year. However, pressure has grown to move faster. It added that markets have already priced in more tightening, so the BOJ may need to surprise traders on both speed and scale to shift the yen’s trend more durably.
Eurozone Data Has Limited Impact
In Europe, the second estimate for euro zone second-quarter GDP showed growth of 0.4% from the prior quarter, unchanged from the first estimate. Meanwhile, first-quarter growth was revised down to 0.0% from 0.1%. From a year earlier, the economy grew 1.0%.
The article said that report had little market impact. Instead, traders kept their attention on central bank policy, inflation, and geopolitical developments.
Later in the day, U.S. retail sales were set to headline the data calendar at 8:30 a.m. ET. In addition, the preliminary University of Michigan survey was due at 10:00 a.m. ET, alongside business inventories. The source said traders would watch the Michigan survey’s one-year and five-year inflation expectations closely.
You can access our other news on Forex markets and global market developments here.
Source: InvestingLive
