Yen gains after BOJ holds rates, dollar slips

By Amanda Cooper and Chibuike Oguh

NEW YORK/LONDON, Oct 30 (Reuters) - 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 strengthened to a high of 157.89 per dollar, set for a 0.11% gain in October. 

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. 

"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 euro was down 0.17% at $1.1163 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 0.14% to $1.3394. The Australian dollar  strengthened 0.1% versus the greenback to $0.7034. 

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, edged lower by 0.02% at 101.86. It has risen 0.39% in October, up for a second straight month.

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 1.79% at $77,430.45, 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. 

(Reporting by Chibuike Oguh in New York; Editing by Emelia Sithole-Matarise)