Both the dollar and yen traded softer against most other currencies in a revived risk-on environment. The yen itself was the underperformer, which drove USD/JPY above 111.00 and to a fresh two-week peak at 111.38. This came as stock markets in Asia and Europe managed to rebound. U.S. equity futures also rose, recovering after being rattled by the hawkish turns of the Federal Reserve Bank and Bank of England this week. The Bank of Japan left both its policy and economic assessment unchanged, as expected, but emphasized a determination to maintain accommodative policy. EUR/USD recouped a chunk of Thursday’s losses, rising to an intraday peak of 1.1183, which is just over 50 pips up on the 17-day low seen at 1.1132 Thursday’s.
Eurozone May Harmonised Index of Consumer Prices (HICP) was confirmed at 1.4% y/y in the final release, as had been expected, and casting little impact on the forex market, although the data is sympathetic to the European Central Bank’s caution in taking away ultra-accommodative monetary policy. Sterling has consolidated the gains seen after the hawkish shift in the BoE at its June Monetary Policy Committee meeting this week.