During Forex market hours on Friday, Bank of Japan (BoJ) announced its new policy regarding the interest rate policy and the news from BoJ shocked the entire foreign exchange currency market. BoJ has decided to implement negative interest rate policy as the month of January comes to an end. After the declaration was made, greenbacks gained significant momentum and its value was increased as compared to its major rivals.
As the two day policy meeting was concluded on January, 29, 2016 it was declared by BoJ that the new interest will decrease by -0.1% and they also stated that in future, if it is required they might further trim the rates. After this decision was taken, USD/JPY pair traded at 120.82 that is 1.70%.
On the other hand, Forex traders keenly waited for the release of fourth quarter growth data of United States that was supposed to be published later on that day. On Wednesday, Federal Reserve did not provide any indication about increasing the interest rate in future. Central Bank of United States presently left the interest rate unchanged. Interest rate was increased earlier in the month of December, 2015.
On Thursday, the data for home sales and durable goods orders were revealed to the general public. The reports showed that home sales increased but they were less than the expected sales forecast. Furthermore, durable goods orders fell more than expected. After the report was released US dollar lost significant ground.
In addition to, Euro lost 0.24% against the greenbacks, to trade at 1.0913. Another report which was released during Forex market hours showed that the rate of inflation that is on year on year basis was 0.4%, and in the month of December rate of inflation (YoY) increased by 0.2%. Moreover, consumer price index (CPI) increased by 1.0% in the month January.
Furthermore, another report released during forex market hours showed that German retail sales lost 0.2% as compared to last month however, it was predicted that retail sales would increase by 0.5%. Other official report that was released on Friday revealed that GDP of Spain has increased by 0.8% in the fourth quarter and it is according to the expectations.
Greenbacks continued to gain ground against Pound Sterling and Swiss Franc. The GBP/USD pair was traded at 1.4339 and USD/CHF traded at 1.0181. On the other hand, Canadian counterpart also lost 0.12% against US dollar to trade at 1.4047.
In contrast, New Zealand and Australian dollars went up against the US dollar. AUD/USD pair gained around 0.08% and NZD/USD pair increased by 0.27%. AUD/USD traded at 0.7090 and NZD/USD traded at 0.6497. US dollar index which measures the relative strength of dollar against six major currencies gained 0.43% and it was 99.05.
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