Today's ECB Policymakers Comments Seem To Help The EUR/USD Pair, The Australian Dollar Fall Against Strong US Dollar
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The dollar rose slightly on Friday, maintaining some momentum after jumps in the previous session after a series of decisions by central banks in Europe. The rise in the USD can be attributed to some shift in trading position ahead of the closely watched US monthly employment report. Trading was relatively limited as markets awaited the latest US employment data later in the day, which could change US Federal Reserve policy. Weekly initial jobless claims in the US released on Thursday indicated strength in the labor market and boosted expectations for strong non-farm payrolls (NFP).
USD/JPY
The US dollar gained on the last day of the week and looks set to continue its bounce from the nine-month low recorded on Thursday, which is seen as a tailwind for USD/JPY.
The Japanese yen, on the other hand, continues to benefit from expectations that high inflation could result in a more hawkish stance from the Bank of Japan (BoJ) later this year. Bets were lifted by Japan's nationwide core inflation, which hit its highest annualized level since December 1981. This is seen as another factor keeping USD/JPY in check, at least for now.
The USD/JPY pair traded high around 128.80 at the beginning of the day, but fell in the following hours. Currently, the USD/JPY pair is trading below 128.40.
EUR/USD
Yesterday, the European Central Bank raised interest rates by half a percentage point on Thursday, but the euro fell below 1.0900 after ECB comments. During the ECB press conference, President Christine Lagarde acknowledged that the outlook for the eurozone has become less worrying for growth and inflation.
The ECB noted the likelihood of another similar rate hike next month, the meeting and its aftermath were in line with market expectations.
Early Friday, ECB policymaker Gediminas Simkus said an interest rate cut this year was not likely. With a similarly hawkish accent, policymaker Peter Kazimierz noted that he did not see the March interest rate hike as the last one. These comments seem to help EUR/USD contain losses for now.
The euro posted slight gains against the US dollar on Friday, thanks in part to news that the eurozone economy saw some gains last month. The EUR/USD pair in the European session is trading above 1.09 again at around 1.0940.
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GBP/USD
The Bank of England raised interest rates for the tenth time but hinted that its tightening cycle may be coming to an end, while Federal Reserve Chairman Jerome Powell said in a press conference following the Fed's 25 bp rate hike that the process of "disinflation" in the United States seemed to be in progress.
Moreover, BoE President Andrew Bailey said that inflation will continue to fall this year and faster in the second half of 2023. In fact, the central bank forecast that the annual CPI inflation in the UK will fall from the current 10.5% to around 4% in 2020. toward the end of the year. This, in turn, has fueled speculation that the current cycle of rate hikes may be coming to an end and weakening the pound sterling.
GBP/USD gained momentum during the European trading hours and went positive above 1.2250 during the day. Currently, the GBP/USD pair is on the border of the level.
AUD/USD
The Australian dollar falls below $0.71, pulling back slightly from nearly eight-month highs on overall dollar strength. Despite this, Australians continue to be supported by expectations that the Reserve Bank of Australia will continue to tighten its policy.
Currently, Aussie Pair is trading at around 0.7060.
Source: investing.com, finance.yahoo.com
