The euro rose in European trading on Friday against a basket of global currencies, extending its recovery for a second consecutive session from a 13-month low against the US dollar, supported by bargain buying and a softer US currency following mixed comments from Federal Reserve officials.

Latest economic estimates suggest that lower oil prices are helping ease inflationary pressures on policymakers at the European Central Bank, reducing the likelihood of another European interest rate increase later this year.

The Price

• Euro exchange rate today: The euro rose around 0.1% against the US dollar to $1.1377, up from an opening level of $1.1369, after touching an intraday low of $1.1354.

• The euro ended Thursday’s session up 0.1% against the dollar, its first gain in four sessions, after hitting a 13-month low of $1.1325 the previous day.

Weekly performance

So far this week, which officially concludes with today’s settlement, the single European currency is down around 0.8% against the US dollar and is on track to post a second consecutive weekly loss due to the Federal Reserve’s hawkish outlook.

US dollar

The US Dollar Index fell around 0.1% on Friday, extending losses for a second straight session and moving further away from a 13-month high, reflecting continued easing in the greenback against a basket of major currencies.

In addition to ongoing profit-taking, the dollar weakened after US inflation data came in line with expectations, while Federal Reserve officials delivered mixed signals regarding the path of monetary policy this year.

Chicago Federal Reserve President Austin Goolsbee said there is a “glimmer of hope” regarding services inflation, though underlying price pressures remain too elevated and are moving in the wrong direction.

Meanwhile, New York Federal Reserve President John Williams said inflation remains too high and that interest rate policy is “well positioned” to reduce price pressures.

Global oil prices

Global oil prices fell more than 1.5% on Friday, resuming losses that were temporarily halted in the previous session, and are on track to test four-month lows amid expectations of smoother crude flows through the Strait of Hormuz.

Lower oil prices help ease concerns about accelerating inflation, reinforcing the case for the European Central Bank to leave monetary policy settings unchanged for an extended period this year.

European interest rates

• Reports: The European Central Bank is considering pausing monetary policy normalization in July if energy prices remain at current levels.

• Money markets currently price the probability of a 25-basis-point ECB rate hike in July at around 30%.

• Investors are awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess those expectations.

The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, as it attempted to recover from a two-year low against the US dollar amid notable buying interest at depressed levels.

The two-year low now sits just one point away from the yen’s weakest levels since 1986, prompting the currency to move away from those levels as Japanese authorities maintain close scrutiny of the foreign exchange market and continue warning of possible intervention to curb excessive weakness and volatility.

The Price

• Japanese yen exchange rate today: The US dollar fell more than 0.1% against the yen to ¥161.60, from an opening level of ¥161.78, after reaching an intraday high of ¥161.853.

• The yen ended Thursday’s session little changed against the dollar after earlier touching a two-year low of ¥161.94, just one point away from its 40-year low of ¥161.95.

Weekly performance

So far this week, which officially concludes with today’s settlement prices, the Japanese yen is down 0.25% against the US dollar and is on track to post a second consecutive weekly loss.

US dollar

The US Dollar Index fell around 0.1% on Friday, extending losses for a second straight session and moving further away from a 13-month high, reflecting continued easing in the greenback against a basket of major currencies.

In addition to ongoing profit-taking, the dollar weakened after US inflation data came in line with expectations, while Federal Reserve officials delivered mixed signals regarding the path of monetary policy this year.

Chicago Federal Reserve President Austin Goolsbee said there is a “glimmer of hope” regarding services inflation, though underlying price pressures remain too elevated and are moving in the wrong direction.

Meanwhile, New York Federal Reserve President John Williams said inflation remains too high and that interest rate policy is “well positioned” to continue reducing price pressures.

Japanese authorities

Japanese authorities are closely monitoring movements in the currency market, particularly as the yen approaches its weakest level in 40 years after breaking above the key ¥160-per-dollar threshold, a level widely viewed as a red line that could trigger renewed intervention to support the currency.

Earlier this week, Japanese Finance Minister Satsuki Katayama held an online meeting with US Treasury Secretary Scott Bessent amid growing concerns about sharp currency volatility.

According to sources cited by Reuters, the discussions focused on proposed measures to address the yen’s historic weakness, including the possibility of intervention in the foreign exchange market.

Katayama stressed that Japanese authorities are fully prepared to take decisive action and intervene directly in the currency market at any time to protect the yen from speculative moves.

Views and analysis

• Matt Simpson, Senior Market Analyst at StoneX, said Japan’s Ministry of Finance may be concerned about USD/JPY rising to its highest level of 2024.

• Simpson added that policymakers may also feel powerless to act, as intervention against a hawkish Federal Reserve and strong US economic data could prove costly and ineffective.

• Former Bank of Japan board member Sayuri Shirai said the yen could weaken to ¥165 per dollar if the Federal Reserve raises interest rates later this year.

Tokyo core inflation

Data released in Japan on Friday showed Tokyo core consumer prices rose 1.6% in June, matching market expectations and accelerating from 1.3% in May.

Despite the improvement, inflation remains below the Bank of Japan’s 2% target, highlighting continued weakness in underlying price pressures and reducing the likelihood of further interest rate increases this year.

Japanese interest rates

• A summary of opinions from the Bank of Japan’s June policy meeting, released on Wednesday, showed that some board members called for additional monetary tightening to move the benchmark interest rate closer to levels considered neutral for the economy.

• Markets currently price the probability of a 25-basis-point rate hike at the Bank of Japan’s July meeting at less than 25%.

• Investors are awaiting further data on inflation, unemployment, and wage growth in Japan to reassess those expectations.

Corn futures on the Chicago Board of Trade fell for a fifth consecutive session on Thursday, pressured by technical selling, weaker crude oil prices, and a stronger US dollar.

The most active CBOT corn contract slipped 0.12% to $4.34-1/4 per bushel by 07:14 GMT.

Oil prices continued to retreat toward levels last seen before the outbreak of the Iran war, as expectations of increased Middle East supplies outweighed concerns about demand.

Lower oil prices often weigh on soybean and corn markets because both crops are widely used as feedstocks for biofuel production.

Meanwhile, the US dollar remained near a 13-month high, reducing the competitiveness of US exports by making them more expensive for overseas buyers.

Soybean futures edged up 0.13% to $11.36-1/2 per bushel, while wheat prices were little changed at $5.96 per bushel.

Wheat had previously received support from concerns that heatwaves in Western Europe could damage crops, alongside mixed outlooks for Northern Hemisphere harvests, including reports suggesting Russian farmers may have planted the smallest wheat acreage in 12 years.

However, the ongoing harvest in the US Plains and abundant global supplies continued to pressure prices.

The US Department of Agriculture is scheduled to release its quarterly grain stocks report at 12:00 p.m. ET on June 30.

Traders said commodity funds were net sellers of CBOT corn and soybean futures during Wednesday’s session.

Oil prices fell on Thursday, giving up the gains recorded during the war as investors bet on improving global crude supplies after tankers that had been stranded in the Arabian Gulf for months began leaving the Strait of Hormuz.

August Brent crude futures, the global benchmark, fell 1.3% to $72.75 a barrel, remaining close to levels last seen before the outbreak of the Middle East war in late February. August US West Texas Intermediate crude futures also declined 1.1% to $69.60 a barrel.

According to oil-tracking firm Kpler, more than 20 oil tankers carrying around 35 million barrels of crude have passed through the Strait of Hormuz since the United States and Iran reached an agreement to reopen the vital waterway.

Non-Iranian vessels had been stranded in the Arabian Gulf for more than three months after Tehran effectively shut down the shipping route at the start of the conflict. Most of those tankers are expected to reach their destinations in Asia by early August.

Banking group Citi said the worst may be over for commodity-curve trading strategies that came under pressure during the US-Iran war, after the surge in near-term oil prices hurt positions that relied on selling front-month contracts and buying longer-dated futures.

The bank added that significant de-escalation is now its base-case scenario, forecasting Brent crude to fall into a range of $60 to $65 a barrel over the next six to twelve months as oil flows through the Strait of Hormuz normalize. Citi noted that any temporary rise in oil prices during the summer should be viewed as a selling opportunity.

However, the naval forces of Iran’s Revolutionary Guard warned on Thursday that safe passage through the Strait of Hormuz would only be permitted through routes designated by Tehran, signaling that risks to the critical maritime corridor remain in place.

The Revolutionary Guard added that vessels violating transit instructions would face “measures,” without specifying what those measures might be.