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Foreign Exchange

Date: July 26, 2019

The dollar stayed near a two-week high versus the yen on Friday as investors pared expectations for aggressive Federal Reserve interest rate cuts ahead of key U.S. economic data later in the day.


The euro held gains after the European Central Bank (ECB) kept policy unchanged, disappointing some market participants who had bet on an easing, but sources told Reuters a rate cut at the ECB’s next meeting appeared certain.


The Fed is widely expected to cut rates, but there are growing views such a move may be a one-off event, not the start of a major easing cycle. The BOJ is also divided over whether to ease policy, but expectations for a move are low.


The dollar traded at 108.620 yen JPY=EBS, near a two-week high of 108.755 yen. The greenback was on course for a weekly gain against the Japanese currency of 0.8%, which would be its biggest since the week ending April 5.


Data due later on Friday is expected to show U.S. economic growth slowed to 1.8% in the second quarter from 3.1% in the previous quarter, but investors will focus on consumer spending to gauge underlying strength of the economy.


Sterling traded below $1.25 on Thursday, little changed, after new Prime Minister Boris Johnson filled his cabinet with Brexiteers and promised he would take Britain out of the European Union on Oct. 31 with or without a transition deal.


The euro was mired near a two-month low on Thursday ahead of a European Central Bank meeting that could signal monetary easing as growth in the currency zone falters.