Forex Today: Unimpressive BoE and ECB boost the US Dollar

What you need to take care of on Friday, February 3:

The US Dollar recovered most of the ground lost post-Fed’s decision amid ECB and BOE monetary policy announcements. The American currency edged higher against most major rivals, with the JPY being its strongest rival and the GBP the weakest.

Earlier in the day, Bank of Japan Deputy Governor Mazasumi Wakatabe said there has been no change to the central bank’s determination to continue with its current monetary policy. USD/JPY finished the day at around 128.60 after extending its weekly decline to 128.07.

The Bank of England came first, and as widely anticipated, Bailey & co. hiked rates by 0.5 percentage points to 4%. Governor Bailey was quite optimistic, as he said that a potential recession will likely be less deep than previously expected. He also said that they would need to watch the path of inflation very closely. GBP/USD ended up falling to a multi-week low of 1.2330.

The European Central Bank also hiked by 50 bps and even confirmed another 50 bps for March. However, President Lagarde said that the following decisions will be a meeting-by-meeting matter and that it will be data-dependant. EUR/USD trades just above the 1.0900 threshold, as investors believe terminal rates are around the corner.

Stock markets advanced, partially limiting US Dollar gains. US Treasury yields eased from their post-Fed peaks and ended the day down.

Spot gold plunged from the $1,950 price zone and finished the day at around $1,913 a troy ounce. Crude oil prices lost some ground, but losses were moderated by the better tone of US indexes. WTI is currently changing hands at $75.80 a barrel.

The week will end with the release of the US Nonfarm Payrolls report on Friday.