The Federal Reserve’s decision to hint at an interest rate cut in July was the big mover in the foreign exchange markets on Friday.
The US dollar was badly hit, and was set to hit its lowest point for five months in its pair against the so-called “safe haven” Japanese yen.
The move by the Federal Reserve, which also gave the dollar a reason to drop by its largest amount in two days across the whole of 2019, brings the central bank into line with others around the world including the European Central Bank.
The Japanese yen rose to a 107.04 high point against the dollar in the JPY/USD pair on Thursday, suggesting that the greenback may be in for a period of downgrading.
The dollar index, which monitors how the dollar is performing compared to several other major global currencies, was down by 0.1% to 96.495 – which was its lowest point since the start of the month.
Elsewhere, the euro did well in the face of the dropping dollar and managed to surge to $1.1319 in the EUR/USD pair.
This was also fuelled by better economic data results from two major European economies, Germany and France.
However, there may be some hope for the dollar. President Donald Trump, who has imposed sanctions on goods brought in from China in recent months, is believed to be ready to meet his Chinese counterpart Xi Jinping at a meeting on the sidelines of the G20 summit. This is due to take place next weekend.
A new forex week is on the horizon as of Monday, and there’s lots for a trader to watch out for.
Monday, there will be inflation report hearings from the UK, which are due to occur at an as yet unspecified time.
The minutes of the Bank of Japan’s latest monetary policy meeting will be released at 11.50pm GMT.
On Tuesday, there’ll be a major speech from the Reserve Bank of Australia’s Assistant Governor for the Financial System, Michele Bullock. This is due to occur at 7.05am GMT.
There’ll be a meeting of OPEC on Tuesday too, which may affect the US dollar.
A speech from the US Federal Reserve’s Chair, Jerome Powell, is expected at 5pm GMT.
The Federal Reserve’s James Bullard, who serves as the President of the Federal Reserve Bank of St. Louis and who is a member of the Federal Open Market Committee, will speak at 10.30am GMT.
This big news on Wednesday will be the decision of the Reserve Bank of New Zealand in relation to its interest rate policy, which is expected at 2am GMT.
Following a trend seen worldwide of either holding off on interest rate rises or even cutting the rates, the Reserve Bank is expected to hold its previous position of 1.5% firm.
A French consumer confidence release covering the month of June is due out too. This is expected to show no change from its previous position of 99 when made public at 6.45am GMT.