Forex Today: BoJ and BoE hold rates, US Core PCE up next

What you need to take care of on Friday, December 20:

The major economies' central bank bonanza finished with decisions of the Bank of England and the Bank of Japan. Both kept rates unchanged, with the BoJ weighing on the Yen, while the BoE’s decision did little to keep afloat the Pound Sterling.

With no significant economic data revealed next week, traders are eyeing the release of the US Core Personal Consumption Expenditures (PCE) Price Index on Friday, December 20. After that, trading activity will diminish amid thin liquidity conditions ahead of the holidays.

The US Dollar continues to record two-year highs after the US Dollar Index (DXY) cleared 108.00, extending its gains to 108.40, up 1.37% weekly. The greenback’s strength was sponsored by the Fed’s decision to push back against aggressive easing for the next year. Market participants eyed three to four rate cuts, but the US central bank estimates just two.

This droves the US 10-year Treasury bond yield higher, rising 3.84% weekly and clearing strong resistance seen at 4.50%.

Earlier, the Bank of England held rates at 4.75% in a 6-3 vote split, with Dhingra, Ramsden, and Taylor voting to cut rates by 25 basis points. The BoE maintained restrictive language in its statement and didn’t provide when and how much it will ease policy next year. The GBP/USD rose as high as 1.2664 before tumbling to 1.2500.

The Yen weakened as the BoJ decided to keep rates unchanged in an 8-1 vote split, as Tamura voted for a 25-bps hike. The BoJ failed to increase rates due to uncertainty regarding Japan’s economic and price outlook. BoJ Governor Ueda said that he needs to see wage negotiation momentum next year and would like to wait for January’s outlook report. The USD/JPY jumped from around 155.00 and hit a daily high of 157.80 before stabilizing around 157.30.

As the New York session ends and Asia begins, the EUR/USD trades near 1.0366, close to the current week’s lows. Antipodeans recovered late in the session, with the AUD/USD rising 0.43% to 0.6243 after hitting yearly lows beneath 0.6200.

Worse-than-expected growth data battered the NZD/USD as a recession hit New Zealand. The Kiwi dropped as low as 0.5607 before recovering some ground and advancing toward 0.5638.

The USD/CAD reached yearly highs of 1.4466 before sliding, as the CAD recovered some ground. The pair finished with losses of 0.45%.

Gold recovered and printed decent gains of 0.56%, hovering below $2,600, capped by the rise in US Treasury yields. Geopolitics and talks of a possible US government shutdown sponsored a leg-up in the golden metal.

Friday’s economic calendar includes Japan’s inflation data and New Zealand’s Balance of Trade figures. During the European session, attention will turn to Germany’s November Producer Price Index and the UK’s Retail Sales for the same month. The week will wrap up with Canadian Retail Sales data, U.S. inflation figures, and the University of Michigan Consumer Sentiment Index.