Forex Today: Japanese Yen weakens on BoJ inaction, focus shifts to PMI surveys

Here is what you need to know on Friday, September 22:

The Japanese Yen struggles to find demand on Friday as markets assess the Bank of Japan's (BoJ) policy announcements. Later in the day, S&P Global will release preliminary September Manufacturing and Services PMI surveys for the Euro area, the UK and the US. Retail Sales Canada and comments from central bank officials will also be watched closely by market participants ahead of the weekend.

US S&P Global PMI Preview: A crucial report in a data-dependent era.

The BoJ left the monetary policy settings unchanged following the September meeting, holding the key rate steady at -0.1% and maintaining the 10-year Japanese government bond yield target at 0%. Speaking on the policy outlook, "we still cannot identify what variable would lead to the achievement of 2% inflation and the end of negative interest rate policy," BoJ Governor Kazuo Ueda said in the post-meeting press conference. He explained that a policy change could only be considered when the achievement of 2% inflation comes in sight. USD/JPY extended its rally after the BoJ event and was last seen trading at its highest level since November 2022 near 148.50.

Bank of Japan leaves interest rate, YCC policy unchanged.

GBP/USD dropped below 1.2300 for the first time since March on Thursday after the Bank of England went against the market expectation for a 25 basis points rate hike and left the interest rate unchanged at 5.25%. Early Friday, the data from the UK revealed that Retail Sales declined 1.4% on a yearly basis in August. The pair stays under bearish pressure early Friday and trades slightly above 1.2250.

The data from Australia showed that the S&P Global Manufacturing PMI declined to 48.2 from 49.6. On a positive note, the Services PMI improved to 50.5 from 47.8, pointing to an expansion in the service sector's business activity. AUD/USD edged slightly higher after these figures and stabilized above 0.6400.

EUR/USD closed virtually unchanged on Thursday and extended its sideways grind near 1.0650 early Friday. The Manufacturing PMI in Germany improved to 39.8 in August and the Services PMI rose to 49.8. Although these readings came in above market expectations, the Euro failed to capitalize on them.

Gold price turned south on Thursday and dropped below $1,920. Early Friday, XAU/USD gathered recovery momentum and rose toward $1,930, supported by the pullback seen in the 10-year US Treasury bond yield.