Broader US stock indices close higher but near key technical levels heading into the weekendNext Week’s Earnings Calendar: Focus Shifts Beyond Big TechU.S. Rig Count Edges HigherBarkin: Rate decision still a “close call”European indices close the day and the week mostly higher.Nikkei: US Treasury Department tells traders, prepare for potential additional interventionFed’s Logan: Favors a rate hike as inflation is not on a sustainable courseUniv. of Michigan Consumer confidence final for July 55.2 vs 54.0 estimateCanada May GDP 0.3% versus 0.2% expectedUS Q2 Employment Cost Index +0.9% vs +0.8% expectedThe USD is higher to start the NA session. How are the charts impacting trader bias?Fed’s Kashkari and Hammack explain their dissents at the last meeting. Inflation too highinvestingLive European markets wrap: Eurozone inflation ticks up in July; USD/JPY intervention again?
The U.S. dollar finished mixed on Friday, but the dominant story remained the Japanese yen. The yen strengthened for a second consecutive day as speculation intensified that Japanese authorities were preparing to support the currency after reports of official rate checks and growing expectations that intervention may have already taken place. Additional reports suggested banks had been instructed to stand ready to exchange yen for euros, reinforcing the belief that policymakers remain uncomfortable with the yen’s recent weakness.
The Bank of Japan left its policy rate unchanged at 1.00%, as widely expected, although board member Takata dissented in favor of a 25-basis-point rate increase. While the policy decision itself had little lasting impact, traders focused instead on the BOJ’s modestly more optimistic economic outlook, ongoing inflation risks, and the possibility that authorities remain willing to act if the yen comes under renewed pressure.
Overall, Friday’s trading was driven less by broad U.S. dollar flows and more by Japan-specific developments, with intervention speculation keeping the yen at the center of attention while most other major currencies traded in relatively narrow ranges.
USD fell 1.07% vs the Japanese yen (USDJPY 157.80).
USD fell 0.06% vs the euro (EURUSD 1.1534).For a technical view, click here.
USD fell 0.14% vs the British pound (GBPUSD 1.3483). For a technical view, click here.
USD fell 0.19% vs the Australian dollar (AUDUSD 0.7038). For a technical view, click here
USD fell 0.24% vs the New Zealand dollar (NZDUSD 0.5892).
USD rose 0.32% vs the Swiss franc (USDCHF 0.8076).
USD rose 0.06% vs the Canadian dollar (USDCAD 1.4018).For a technical view, click here
In central bank news, the 3 Fed dissenters did give their views which is becoming a tradition on the Friday after the meeting. All three dissenters—Neel Kashkari, Beth Hammack, and Lorie Logan—delivered a consistent message explaining why they favored a 25 basis point rate hike at this week’s FOMC meeting. Each argued that inflation remains too high and is not on a credible path back to the Fed’s 2% target without additional policy tightening. Kashkari emphasized that repeated supply shocks and growing demand from areas such as data center investment have increased the risk of inflation becoming entrenched, making a series of gradual rate increases the more prudent approach. Hammack stressed that current policy is not restrictive enough, warning that delaying action would only make inflation harder to control while the labor market remains resilient. Logan echoed those concerns, arguing that inflation risks remain skewed to the upside, monetary policy is not sufficiently restraining the economy, and a modest rate hike now would reduce the likelihood of more aggressive tightening later. Collectively, the three dissents reinforced the hawkish view that acting sooner with incremental rate increases is preferable to waiting until inflation forces a more forceful response.
Richmond Fed President Tom Barkin also spoke and described this week’s rate decision as a “close call,” signaling that he sees the current policy stance as being near the appropriate level but is not yet convinced that another rate hike is warranted. While acknowledging that inflation pressures continue to filter unevenly through the economy, Barkin remains skeptical that the labor market has strengthened enough to justify additional tightening. He declined to say whether he would have joined the three dissenters who favored a rate increase, leaving his position balanced between the Fed’s hold decision and the hawkish push for higher rates. Overall, Barkin appears to be taking a wait-and-see approach, remaining on the fence as he looks for clearer evidence from upcoming inflation and labor market data.
The market continued to push yields higher out the curve with the 10 year up 5.1 basis points to 4.714%. The 30 year rose 5.5 basis points today to 5.261%. For the month, yields moved sharply higher with a steepening bias.
2 year rose 9.2 bps5 year rose 20 bps10 year +25 bps30 year 31.6 bps
Stock indices closed higher on the day
Dow Jones Industrial Average (DJI): +278.05 points (+0.53%) to 52,491.26S&P 500 (SPX): +52.17 points (+0.70%) to 7,489.81Nasdaq Composite (IXIC): +251.68 points (+1.00%) to 25,373.85Russell 2000 (RUT): -14.76 points (-0.50%) to 2,931.34Nasdaq 100 (NDX): +167.85 points (+0.60%) to 28,274.20
For the month the Nasdaq fell -3.20%, while the Dow and the S&P end the month little changed.
This article was written by Greg Michalowski at investinglive.com.