Forex Today: Japanese Yen rises on BoJ hike, attention turns to PMI reports

Here is what you need to know on Friday, January 24:

The Japanese Yen (JPY) gathers strength against its major rivals early Friday following the Bank of Japan's (BoJ) decision to raise the policy rate by 25 basis points. Later in the day preliminary January Manufacturing and Services PMI data for Germany, the Eurozone, the UK and the US will be watched closely by market participants.

Following its first policy meeting of the year, the BoJ announced that it hiked the short-term rate target by 25 bps from 0.15%- 0.25% to 0.40%- 0.50%. In the policy statement, the BoJ noted Japan's economy is recovering moderately, albeit with some weakness, and added that the underlying inflation is gradually heightening toward the BoJ's target.

In the post-meeting press conference, BoJ Governor Kazuo Ueda noted that the impact of foreign exchange rates on prices has become larger than in the past. "We will keep adjusting the degree of easing if our economic, price outlook is to be realised," Ueda reiterated.

After closing in negative territory, USD/JPY stays under bearish pressure and trades near 155.00 in the early European session. Reflecting the broad-based JPY Strength, EUR/JPY and GBP/JPY pairs both trade marginally lower on the day. 

While speaking during the World Economic Forum hosted in Davos, Switzerland, on Thursday, US President Donald Trump noted that EU tariffs were making it very difficult to bring products into Europe and reiterated that tariffs on imports from Canada and Mexico will begin on February 1. Early Friday, Trump spoke again, this time noting that he would rather not have to use tariffs on China but called tariffs a "tremendous power." The US Dollar (USD) struggles to find demand early Friday. At the time of press, the USD Index was down 0.4% on the day near 107.70.

EUR/USD gains traction in the European morning on Friday and trades above 1.0450. Later in the session, European Central Bank President Christine Lagarde will participate in Stakeholder Dialogue 'The global economic outlook' during the World Economic Forum.

After posting modest gains on Thursday, GBP/USD gathers bullish momentum early Friday and trades at a fresh two-week high above 1.2400. 

Following Thursday's choppy action, Gold extends its weekly rally early Friday and trades above $2,770 for the first time since late October, when it set a record high of $2,790.