FOREX-Yen set for third straight daily gain against dollar after BOJ holds rates

The yen was on track for a third consecutive daily gain on Friday after the Bank of Japan left rates unchanged and upgraded its inflation outlook, while declining US Treasury ‌yields weighed on the dollar. The BOJ left its main rate at 1.25% in a widely anticipated move, but stressed that its policy has entered a new, more hawkish phase open to raising rates once every few months.

The yen was last up 0.11% at 157.51 per dollar, but was on track for a monthly loss ‌in October. "The market is a little disappointed in the BOJ," said Joseph Trevisani, senior analyst at FXStreet. "The yen is a little bit stronger today but not ‌as strong as it has been. We still have the Fed bias countering what the BOJ is doing."

The BOJ wraps up a week of central bank decisions, with the European Central Bank, the US Federal Reserve and the Reserve Bank of New Zealand all leaving interest rates unchanged as they bide their time amid stubborn inflation and tightening financial conditions. "We think the macroeconomic backdrop ⁠will remain sufficiently ​constructive for the BoJ to hike ⁠in December, March and July bringing rates to 2% before taking a pause to assess the impact of tightening," said TS Lombard analyst Rory Green in an investor note.

The euro was down 0.12% ⁠at $1.1168 and was headed for a second straight monthly loss in October. It hit its lowest since May 2025 on Thursday, after the ECB left rates unchanged and indicated higher ​bond yields had tightened financial conditions, initially prompting traders to lower their expectations for a hike in December. The Bank of England and the Reserve ⁠Bank of Australia will be in focus next week.

Sterling strengthened 0.15% to $1.3396. The Australian dollar strengthened 0.09% versus the greenback to $0.70345. Both currencies were on track for an October monthly gain. AI WORRIES

When investors seek out ⁠safe-haven ​assets, the dollar is often a beneficiary. But on Friday the drag from a decline in Treasury yields was stronger. Results from Alphabet, Amazon and Intel this week have rekindled worries about AI spending, which triggered a selloff in tech stocks on Friday. The dollar index, which tracks the US currency against six others, ⁠was flat at 101.88. It is set for a second straight month of gains.

The euro has found some support from the pressure that the AI-led selloff ⁠has put on the dollar, but ⁠with euro zone economic growth lagging that of the United States, this strength may soon dissipate, according to Barclays currency strategist Lefteris Farmakis. Elsewhere, bitcoin was down 2.61% to $76,780.93, as investors pulled money from digital assets, after hackers stole $6.3 billion from Binance, ‌the world's biggest cryptocurrency exchange, in ‌the biggest crypto heist on record.