Investing.com — Asian currencies were mixed on Friday as the Japanese yen held relatively steady ahead of the Bank of Japan’s policy decision, while the U.S. dollar weakened alongside Treasury yields amid a fresh selloff in artificial-intelligence stocks.
Investors also assessed the outlook for global interest rates after the Federal Reserve, European Central Bank and Reserve Bank of New Zealand all kept borrowing costs unchanged this week, with the BOJ set to conclude a busy run of central-bank meetings.
The U.S. dollar index fell 0.3% to 101.76, although it remained on track for a 0.3% gain in October, marking a second consecutive monthly advance. The USD/JPY pair slipped 0.2% to 157.51, while the EUR/USD pair rose marginally by 0.1% to 1.1195 and the GBP/USD pair gained modestly to 1.3391.
The yen was on track to lose around 0.2% against the dollar this month, while the euro was heading for a 1.2% monthly decline.
Yen awaits BOJ as AI-related selling sends investors toward bonds
The BOJ is widely expected to leave its policy rate unchanged at 1.25% on Friday, despite persistent inflation pressures. Markets are looking for a relatively hawkish message on the future path of interest rates, with traders pricing in around an 80% probability of a December rate increase.
The decision follows rate holds by the Federal Reserve, ECB and RBNZ this week.
Those central banks are taking time to assess persistent inflation and tighter financial conditions, but elevated energy prices and the lack of progress toward resolving the Middle East conflict mean further tightening has not been ruled out.
The Bank of England and Reserve Bank of Australia will be in focus next week.
The yen had weakened slightly to around 157.81 per dollar in earlier trading and was on course for a monthly decline of about 0.2%, the pair was little changed over the week.
Aussie tracks inflation and producer costs ahead of RBA meeting
The Australian dollar was little changed at $0.7033, although it has gained around 1.2% this month and was 0.2% higher than Monday’s close. Investors were weighing fresh producer-price data against September inflation figures and comments from RBA Governor Michele Bullock ahead of next week’s policy meeting.
