In the European session on Friday, USD/JPY trades lower near 149.70, breaking a three-day winning streak that started on Tuesday. The USD/JPY pair has pulled back despite achieving weekly highs, which is related to the US Dollar’s decline.
As of press time, the US Dollar Index is trading down around 106.30, declining from the weekly highs. The negative US Treasury yields contribute to a decline in the US Dollar (USD), with the 10-year US bond yield being down 1.23% at 4.64% at the time of writing. The United States’ dynamic economic environment may have limited the US Dollar’s (USD) losses. The Consumer Price Index (CPI) increased by 3.7% annually in September, slightly more than the predicted 3.6% increase.
In the midst of returning bets on additional Federal Reserve (Fed) rate hikes, the price of gold (XAU/USD) experienced an intraday turnaround from the $1,885 region ( over a two-week high touched on Thursday), and finished towards the lower end of its daily range. Release of consumer inflation data from the United States (US), which increased more than anticipated in September and supports chances for additional Fed tightening, has been the major event for international markets during the past 24 hours. The large overnight increase in US Treasury bond yields as a result of this caused a significant US Dollar (USD) short-covering rally, which was therefore seen to be a major factor putting pressure on the precious metal.
The EUR/GBP pair trades back-and-forth after a strong recovery to near 0.8650 in the European session. UK’s Manufacturing and Industrial Production dropped by 0.7% and 0.8% on a monthly basis. UK firms have slowed down their manufacturing activities as higher interest rates, supply chain disruptions, strong inflation have dampened the overall demand environment. Also, firms have postponed their plans of increasing their operating capacity due to higher mortgage rates.