Daily Forex Market Report 17-Jan-2023: GBP and EURO rise against the Yen despite ruminations of a hawkish Bank of Japan move

Dollar-yen is worth keeping an eye on over the coming days, as investors await the Bank of Japan’s interest rate decision on Wednesday.

Barring a major plot twist, the BoJ is unlikely to move the base rate off the floor, but comments from governor Haruhiko Kuroda will be pored over for signs of hawkishness following a widening of the yield curve allowance band at the last meeting.

Any hawkish allusions could see USD/JPY pushed lower, although the market doesn’t seem convinced, given that the pair added 0.4% to 1.288 this morning in the third straight day of gains.

Sterling and the euro have similarly made bullish moves against the yen.

UK unemployment remained unchanged at 3.7% according to this morning’s read, hitting forecasts dead on, although average earnings excluding bonuses exceeded expectations slightly, increasing 6.4% year on year against the 6.3% forecast.

Cable had an indecisive trade yesterday, ultimately closing 14 pips lower at 1.220 before dipping further to 1.219 in this morning’s Asia trading window. However, the employment and earnings data provided support for the pound, pushing Cable higher on the one-hour chart.

Will GBP/USD be pushed higher? – Source: capital.com

The euro made similar Monday gains against the pound, closing higher at 88.70p, but this morning’s data read saw the EUR/GBP pair pushed lower to 88.60p.

The bond market has remained unchanged, with 10-year gilt yields staying fixed at 3.39%.

Tomorrow is gearing up to be a major day on the economic calendar, with UK and Eurozone inflation, BoJ base rate and US PPI data all scheduled for release.

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