Dollar’s rally loses momentum, attention turns to BoJ and PMIs

The highlights of the Asian session will be the Bank of Japan meeting. Japan’s National CPI and New Zealand’s trade data are due on Friday. The first glimpse of economic activity in September will be provided by the Global PMIs, starting with the preliminary numbers from Australia and Japan. Later in the day, the UK and Canada will report retail sales data.

Here is what you need to know on Friday, September 22:

The US Dollar Index finished marginally lower on Thursday after reaching 105.73, the highest level since March. The DXY pulled back during the American session amid a correction of the US Dollar and a pullback in US Treasury yields.

Data from the US came in mixed, with a decline in Initial Jobless Claims to 201,000, the lowest level since January. The Philly Fed tumbled to -13.5 in September, and Existing Home Sales fell in August to an annual rate of 4.04 million. The Greenback peaked after the Jobless Claims data, which pointed to a still robust labor market, and then started to correct. On Friday, the US S&P Global PMIs are due.

Stocks in Wall Street fell for the second consecutive day on Thursday, but this time the negative market sentiment did not help the Dollar. The Dow Jones lost 1.08%, and the Nasdaq tumbled 1.82%.

EUR/USD hit fresh monthly lows at 1.0616 and then erased losses to end around 1.0660. On Friday, the preliminary September PMIs are due.

USD/JPY reached multi-month highs near 148.50 before turning to the downside, falling more than a hundred pips. The pair had its worst daily performance in weeks. On Friday, the Bank of Japan will announce its decision on monetary policy. No change is expected.

The Swiss Franc tumbled on Thursday after the Swiss National Bank (SNB) surprised the market by keeping interest rates on hold at 1.75%, against expectations of an increase to 2%. USD/CHF finally broke above 0.9000, hitting three-month highs, while EUR/CHF rose from 0.9580 to 0.9680.

The Pound was among the worst performers after the Bank of England decided to keep its key rate unchanged. It was a close call, with a 5-4 vote at the Monetary Policy Committee. GBP/USD bottomed at 1.2234 and then rebounded to the 1.2300 area, boosted by the decline of the US Dollar. On Friday, the UK will report Retail Sales.

AUD/USD lost ground again but managed to rise back above 0.6400, even amid a deterioration in market sentiment. On Friday, Australia’s PMI data is also due.

USD/CAD rose for the second day in a row but pulled back under 1.3500 during the American session. Canada will report Retail Sales on Friday.