Nikkei Gains Fade Amid Firmer Yen After BOJ Holds Rates

Japan's Nikkei share average saw early gains fade as the yen firmed following the Bank of Japan's decision to keep interest rates unchanged. The central bank upgraded its assessment on consumption, while Governor Kazuo Ueda is expected to cautiously hint at future rate hikes, according to analysts.

Japan's Nikkei share average pared early gains amid a firmer yen on Friday, following the Bank of Japan's decision to keep interest rates unchanged, as anticipated. The central bank also upgraded its assessment on consumption, stating it has been on a 'moderate increasing trend.'

The Nikkei share average initially rose by 1.8% to 37,834.09 in the afternoon session after starting the midday break up by 2.1%. Following the policy decision, the yen strengthened against the dollar, appreciating by 0.3% to 142.16 as of 0336 GMT. Meanwhile, 10-year Japanese government bond futures dipped by 0.08 yen to 144.58 yen. Cash bonds were yet to trade post the BOJ announcement.

Focus now shifts to BOJ Governor Kazuo Ueda's news conference set for 0630 GMT. Analysts expect Ueda to maintain a cautiously hawkish stance, aiming to avoid market disruption while signaling potential interest rate hikes in December or January.