Forex Today: A volatile day, bullish for the US Dollar

Here is what you need to know for July 20:

During the Asian session, we have Australian labour market data and Japan’s trade balance for June are out.

The broader US session was governed by markets that reacted positively to the below consensus Consumer Price Index print in the UK, while awaiting a string of tech earnings due post-session. 

UK Core CPI eased for the first time since January from 7.1% YoY to 6.9% YoY and service inflation fell from 7.4% YoY to 7.2% YoY. However, wage growth is accelerating which will make the Bank of England’s (BoE) job of getting inflation down more difficult. Nevertheless, both the core and headline measures came in below expectation and markets pared back expectations the BoE will hike 50bp next month. Consequently, GBP/USD continued its decline and dropped from a high 1.3041 to a low of 1.2867.

This gave the US Dollar a lift. The US Dollar index, DXY, printed a high of 100.535 and from a low of 99.925. Also, the weakness in the yen Wednesday was positive for the US Dollar. 

USD/JPY on Wednesday rose by +0.62%. The yen was under pressure Wednesday after Bank of Japan's Governor Ueda suggested that there will be a continuation of the BOJ’s easy monetary policy until there is a shift in its assessment for achieving its inflation target. Stocks were higher which dented the allure of the Yen and its safe-haven demand. 

As for the Euro, the DXY rally was a painful ride for stubborn bulls. An additional decline in the 10-year German bund yield to a 3-week low weakened the euro’s interest rate differentials and EUR/USD ended the day considerably lower touching a low of 1.1174.

Lower global government bond yields Wednesday were a bullish factor for precious metals, however, with Gold shining on at times in a volatile US session. However, the Yellow metal ended the day up high in the range and flat near $1,977 from within the balance of the low $1,969.81 and $1,9870.99. Meanwhile, there has been data that shows a fund liquidation of gold weighing on prices as holdings in gold ETFs fell to a 4-month low on Tuesday. Bitcoin is up $181.47 today or 0.61% to $29976.42 Crude oil and gasoline prices Wednesday settled mixed, giving up earlier gains.