EUR/USD Pair Is Belowe $1.07, USD/JPY Pair Is Back To 131 And GBP/USD Pair Is Slightly Above $1.21
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During the American session, the University of Michigan will publish a preliminary consumer sentiment survey for February. The main consumer confidence index is expected to rise to 65 from 64.9 in January. Market participants will keep a close eye on the component of the survey on inflation expectations for the next year, which fell to 4% in January from 4.4% in December. An unexpected increase in this reading could strengthen the US dollar.
USD/JPY
The yen strengthened on Friday before recovering slightly after Kazuo Ueda, who was reportedly tapped as the next governor of the Bank of Japan (BOJ), said the central bank's monetary policy was the right one.
The government is also nominating Ryozo Himino, the former head of Japan's banking regulator, and BOJ director Shinichi Uchida as deputy governors, the Nikkei said.
BOJ deputy governor Masayoshi Amamiya was the frontrunner for the role of governor, but the Nikkei reported that he turned down the job. The government is expected to present candidates to parliament on February 14.
The BOJ shocked markets in December when it raised the 10-year yield cap to 0.5% from 0.25%, doubling the allowable range above or below zero.
USD/JPY managed to rebound towards 131.00 after falling below 130.00 earlier in the day.
EUR/USD
EUR/USD picked up momentum and climbed to around 1.0800 at the end of Thursday, but lost much of its daily gains and closed below 1.0750.
EUR/USD came under slight downward pressure and fell towards 1.0700 during Friday's European session. The US dollar gained strength thanks to rising US Treasury yields.
The euro hit a 10-month high against the dollar earlier this month. The prospect of a milder recession thanks to falling energy prices and plentiful natural gas supplies, coupled with China's exit from three years of severe COVID-related restrictions, has generally ignited investors' appetite for European assets.
However, this enthusiasm has made the euro look vulnerable, at least in the short term. The Euro is set for a second consecutive week of declines and at the time of writing EUR/USD is trading below 1.07 at 1.6998.
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GBP/USD
The pound weakened on Friday after data showed the UK economy stalled in the final three months of 2022, avoiding a technical recession but recording zero growth.
The UK Office for National Statistics said on Friday that the UK economy contracted by 0.5% on a monthly basis in December and came to a standstill in the fourth quarter. On the positive side, industrial production rose 0.3% in December, beating market expectations for a 0.2% decline.
The Bank of England forecast last week that the UK would enter a shallow but lengthy recession starting in the first quarter of this year and lasting five quarters.
Moreover, Money Markets shows that investors believe that UK interest rates will peak below 4.40% by late summer, from the current 4%. UK consumer inflation data will be released next week and may have a bigger impact on these expectations.
The GBP/USD pair previously surged to levels above 1.2130 but lost momentum and is now trading just above 1.2100 and below 1.2110.
AUD/USD
The Australian dollar held below $0.695, pressured by hawkish signals from Federal Reserve officials who reiterated their commitment to bring down inflation with more rate increases.
The Australian Dollar remains supported by expectations that the Reserve Bank of Australia will tighten policy further.
The RBA’s latest monetary policy statement showed that the central bank revised its inflation forecasts higher for this year, saying price pressures were spreading into services and wages.
AUD/USD is headed towards 0.6900 amid disappointing Chinese CPI and PPI data. The Australian pair is not benefiting from the RBA's hawkish monetary policy statement, currently the Aussie pair holds above 0.6920.
Source: finance.yahoo.com, investing.com
