FX Today: BoE, ECB and US CPI maintain US Dollar under pressure

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.17%	-0.02%	-0.02%	-0.08%	-0.19%	0.04%	-0.15%
EUR	-0.17%		-0.20%	-0.20%	-0.25%	-0.35%	-0.13%	-0.32%
GBP	0.02%	0.20%		0.00%	-0.06%	-0.17%	0.06%	-0.13%
JPY	0.02%	0.20%	0.00%		-0.05%	-0.16%	0.04%	-0.13%
CAD	0.08%	0.25%	0.06%	0.05%		-0.10%	0.09%	-0.07%
AUD	0.19%	0.35%	0.17%	0.16%	0.10%		0.22%	0.04%
NZD	-0.04%	0.13%	-0.06%	-0.04%	-0.09%	-0.22%		-0.19%
CHF	0.15%	0.32%	0.13%	0.13%	0.07%	-0.04%	0.19%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

EUR/USD is trading near the 1.1720 price region, with the EUR under selling pressure following the European Central Bank's decision to keep rates unchanged, as widely expected. The statement went unnoticed; however, economic projections indicated revised growth and inflation forecasts, which were not particularly surprising.

GBP/USD is muted near 1.3370, after trimming almost all its intraday gains in the American session on Thursday. The Bank of England (BoE) announced a 25 basis point interest rate cut, which was expected. The MPC voted 5-4 in favor of the cut, also aligning with expectations, despite increasing inflationary pressures in the United Kingdom.

AUD/USD has little upward momentum and trades near 0.6620 late on Thursday.

USD/JPY is trading near the 155.60 price region, holding its ground and awaiting the Bank of Japan (BoJ) interest rate decision, which is expected to be a 25 bps tightening announcement in the early Asian session on Friday.

Gold is trading at $4,330 per troy ounce, little changed on Thursday. XAU/USD advanced towards a two-month high of $4,374 earlier in the day, but ended up giving up some of its gains after United States (US) inflation data came in lower than expected.

Bank of Japan FAQs

What is the Bank of Japan?

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

What has been the Bank of Japan’s policy?

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

How do Bank of Japan’s decisions influence the Japanese Yen?

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

Why did the Bank of Japan decide to start unwinding its ultra-loose policy?

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.