Forex - Weekly outlook: 09.25 - 09.29
The dollar slid against the yen on Friday, snapping five days of gains as heightened tensions on the Korean peninsula bolstered safe haven demand for the Japanese currency.
USD/JPY was down 0.43% at 111.98 late Friday, retreating from Thursday’s two-month high of 112.70.
The yen gained ground after North Korea said on Friday it could test a hydrogen bomb over the Pacific Ocean after U.S. President Donald Trump threatened to “totally destroy” the country if the U.S. was forced to defend itself or its allies.
The remarks added to concerns that the escalating rhetoric could lead to one side misinterpreting the other, with dangerous consequences.
The dollar hit the highest level since mid-July against the yen on Thursday after the Bank of Japan kept monetary policy unchanged. The move higher in the dollar was also prompted by the Federal Reserve’s policy statement on Wednesday in which it indicated that it is still on track to raise interest rates in December.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 91.95 late Friday.
The euro was slightly higher against the dollar, with EUR/USD late at 1.1957 after rising as high as 1.2004 earlier.
The single currency touched the day’s highs after robust economic data out of the euro zone underlined expectations for tighter monetary policy from the European Central Bank.
The euro was also higher against the softer pound, with EUR/GBP advancing 0.64% to 0.8847.
Sterling remained on the defensive after a closely watch speech by British Prime Minister Theresa May gave few new indications on how Brexit will proceed.
May proposed a transition period of around two years after UK leaves the European Union, during which time access to the single market will continue on current terms.
Sterling was lower against the dollar, with GBP/USD down 0.53% at 1.3509 in late trade.
In the week ahead, market players will turn their attention to fresh comments from Fed Chair Janet Yellen as expectations start to grow for a December rate hike.
Investors will be focusing on a pair of speeches from ECB President Mario Draghi as well as remarks from the heads of central banks in the UK, Canada and Japan.
Monday, September 25
Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Osaka.
The Ifo Institute is to report on German business climate.
New York Fed President William Dudley and Chicago President Charles Evans are both due to speak.
ECB President Mario Draghi is to testify about the economy in the European Parliament in Brussels.
Tuesday, September 26
Minneapolis Fed chief Neel Kashkari and Fed Governor Lael Brainard are both to speak.
New Zealand is to release data on business confidence.
The U.S. is to produce reports on consumer confidence and new home sales.
Later in the day, Fed Chair Janet Yellen is due to deliver a speech in Cleveland.
Wednesday, September 27
The U.S. is to release reports on durable goods orders and pending home sales. Later in the day Fed Governor Lael Brainard is to speak.
Bank of Canada Governor Stephen Poloz is to deliver a speech in Newfoundland.
Thursday, September 28
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.
Germany is to release preliminary inflation figures.
BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo.
Bank of England Governor Mark Carney is due to deliver remarks in London. Fed Vice Chair Stanley Fischer is also to speak at the same event.
The U.S. is to release final figures for second quarter growth as well as data on jobless claims.
Friday, September 29
China is to publish its Caixin manufacturing PMI.
Germany is to report on retail sales.
The UK is to publish figures on the current account and a final estimate of second quarter growth.
The euro zone is to publish flash inflation figures for September.
Canada is to report on economic growth for July.
The U.S. is to release reports on personal income and spending, which include the personal consumption expenditures inflation data, the Fed's preferred metric for inflation as well as data on manufacturing activity in the Chicago region.
ECB chief Mario Draghi is scheduled to speak in London.