USD/JPY advances sharply on Friday, trading around 156.95 at the time of writing, up 0.63% on the day. The pair has pulled back after reaching a daily high of 158.06 earlier in the day.

The Pound Sterling retraces after reaching a daily high of 1.3375 on upbeat UK data, as headlines suggest that an oil supply shock has sent crude prices higher and reignited investors' fears of high inflation. The GBP/USD trades at 1.3356, down 0.03%.

Brown Brothers Harriman’s (BBH) Elias Haddad notes GBP/USD is holding just above recent lows as UK August retail sales beat expectations, reversing July’s decline and firming market pricing for a November Bank of England (BoE) rate hike.

USD/CAD edges higher on Friday, trading around 1.4000 at the time of writing, up 0.10% on the day. The US Dollar (USD) remains supported by expectations of further interest rate hikes from the Federal Reserve (Fed), while the rebound in US Treasury yields adds to the Greenback’s appeal.

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) remains under pressure near 1.40 against the Dollar, reflecting a firm USD tone and wider US–Canada front-end spreads.

EUR/USD remains on the defensive on Friday and heads for a weekly loss as the Federal Reserve’s (Fed) hawkish policy outlook keeps the US Dollar (USD) firmly supported. A rebound in Oil prices and US Treasury yields adds pressure on the pair.

Danske Bank’s Danske Research Team notes that the Bank of Japan raised its policy rate to 1.25% with a 7-2 vote, signalling continued but cautious tightening.

NZD/USD trades lower around 0.5710 on Friday at the time of writing, down 0.34% on the day.

EUR/GBP trades little changed on Friday as stronger-than-expected UK Retail Sales data lends some support to the British Pound (GBP) after it came under pressure following the Bank of England’s (BoE) monetary policy announcement on Thursday.

Brown Brothers Harriman’s (BBH) Elias Haddad highlights pronounced Japanese Yen (JPY) underperformance, with USD/JPY near 158.00 after a Bank of Japan rate hike to 1.25%. The Bank of Japan (BoJ) signaled cautious tightening, expecting only moderate growth and delayed achievement of 2% inflation.

Silver (XAG/USD) trades higher for the second consecutive day on Friday, reaching session highs above $67.00 after bouncing from lows near $62.00 earlier this week.

The Euro (EUR) is down 0.12% to near 1.1460 against the US Dollar (USD) during the European trading session on Friday.

AUD/USD rises 0.20% on Friday to trade around 0.7125 at the time of writing. The Australian Dollar (AUD) benefits from hawkish comments by Reserve Bank of Australia (RBA) officials, who keep the door open to further monetary tightening to bring inflation sustainably back toward the target.

The Japanese Yen (JPY) underperforms its major currency peers on Friday after the Bank of Japan’s (BoJ) monetary policy announcement. In the European trade, the USD/JPY pair trades 1.3% higher to near 158.00.

The Swiss Franc (CHF) holds losses against the US Dollar (USD) on Friday, after dropping nearly 1% this week and about 2% over the last two weeks.

AUD/JPY jumps on Friday and trades around 112.60 at the time of writing, up 1.54% on the day. The Australian Dollar (AUD) benefits from a sharp decline in the Japanese Yen (JPY), despite the Bank of Japan (BoJ) raising its policy rate to the highest level since 1995.

ING’s Francesco Pesole highlights that recent European Central Bank commentary remains broadly hawkish, with limited pushback from the dovish camp.

Danske Bank’s Danske Research Team highlights that the Bank of England left Bank Rate at 3.75% with a 6-3 vote, disappointing hawkish market expectations and triggering GBP weakness and lower rates.

The British Pound (GBP) is up 0.1% at around 1.3372 against the US Dollar (USD) during the European trading session on Friday. The GBP/USD pair gains as the British currency rises, following the release of the surprisingly upbeat United Kingdom (UK) Retail Sales data for August.

MUFG’s Derek Halpenny notes that the Bank of Japan’s 25bp hike to 1.25% fell short of hawkish market pricing, triggering an initial Yen sell-off as expectations for larger moves proved overdone.

United Overseas Bank’s (UOB) Quek Ser Leang notes USD/CHF remains in a consolidation phase after a sharp rally, with intraday trading expected between 0.8225 and 0.8265.

The Euro (EUR) trades in a tight range at around 1.1485 against the US Dollar (USD) during the European trading session on Friday.

The GBP/JPY cross builds on its strong intraday rally and climbs to a nearly two-week top, above mid-210.00s during the early European session on Friday. Spot prices now seem poised to register gains for the first time in three weeks.

NZD/USD depreciates after posting gains the previous day, trading around 0.5720 during the early European hours on Friday. The pair loses ground as the US Dollar (USD) recovers its daily losses due to hawkish comments from Federal Reserve Chair Kevin Warsh.

ING’s Frantisek Taborsky reports that the Bank of Japan delivered a 25bp hike to 1.25% in a split decision, acknowledging persistent inflation risks but with notable dissent.

The USD/JPY pair trims a part of strong intraday gains to a two-week high, though it holds comfortably above mid-156.00s during the post-meeting Bank of Japan (BoJ) press conference.

The USD/CAD pair trades in positive territory around 1.3995 during the early European trading hours on Friday. The US Dollar (USD) extends its rally against the Canadian Dollar (CAD) on a hawkish tone from the US Federal Reserve (Fed).

United Overseas Bank’s (UOB) Quek Ser Leang highlights that GBP/USD remains under pressure after four consecutive daily declines, though short-term momentum has not intensified. Intraday, the British Pound (GBP) is expected to range between 1.3335 and 1.3390.

EUR/GBP inches lower after three days of gains, trading around 0.8590 during the Asian hours on Friday. The currency cross is facing downward pressure as the British Pound (GBP) gains momentum following stronger-than-expected United Kingdom (UK) Retail Sales data.

The British Pound (GBP) has ticked up against the US Dollar (USD) on Friday, following an unexpected increase in UK Retail Sales.