Dollar Stable, Yen Weakens After BOJ Meeting By

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By Peter Nurse – The U.S. Dollar stabilized in early European trading Friday ahead of key inflation data being released. The Japanese yen edged lower Friday after the Bank of Japan maintained its ultra-low interest rate and dovish stance.

After posting a 0.8% overnight gain, the, which tracks greenback against six other currencies, closed flat at 110.475 at 03:05 ET (07;05 GMT).

On Thursday, the dollar gained some strength following a sharp fall of the euro. The euro has the largest weighting in the index. However, the Fed raised rates by 75 basis point as expected but took a more dovish tone regarding its rate outlook.

This was despite previous weakness. Expectations for a pivot by the to a more aggressive pace of tightening monetary have increased.

With this in mind, traders will focus on the release of the , the Fed’s favorite inflation gauge, later in the session for clues of the central bank policymakers’ intentions at next week’s policy-setting meeting. This is expected show a 0.5% increase in September, slightly lower than 0.6% the previous month.

After the -0.1% target for short term interest rates was left unchanged, the stock rose 0.1% to 146.43. The pledge to keep the bond yield at 0% and maintain its -0.1% target were also kept.

However, the Japanese central bank raised its inflation forecasts for 2024, which indicates more pain in the near-term and more pressure on the currency.

The eurozone central bank dropped the September reference to raising rates “over the next several meeting” and instead suggested that the pace of rate rises would be less aggressive.

France’s third quarter growth was 0.2% according to preliminary readings. This was in line with the expectations, but down from 0.5% quarterly growth in the previous quarter.

fell 0.3% to 1.1526, handing back some of the week’s near 2% gains on optimism that new British Prime Minister Rishi Sunak will adopt a more fiscally prudent stance than his predecessor Liz Truss set out in her brief tenure.

Falling 0.2% to 0.6433; rising 0.1% to 0.5832; while rising 0.1% to 7.2367 due to China’s new COVID lockdown measures. This increases uncertainty over China’s recovery.

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