Yen has brief gain after BOJ, while AI jitters weigh on dollar
TLT•The yen briefly strengthened after the Bank of Japan held its main rate at 1.25% and raised its inflation forecast for the next financial year to 2.6% from 2.4%. The dollar weakened as lower Treasury yields followed a selloff in AI shares.
1. Yen reverses early gain
The yen briefly strengthened after the Bank of Japan held its main rate at 1.25% and raised its inflation forecast for the next financial year to 2.6% from 2.4%. It reached 157.115 per dollar before giving back its gains to trade at 157.67. One board member dissented, calling for a rate hike.
2. Central banks hold rates
The European Central Bank, U.S. Federal Reserve and Reserve Bank of New Zealand also left rates unchanged. A currency strategist said the global tightening cycle is still expected to continue, while investors will watch decisions from the Bank of England and Reserve Bank of Australia next week.
3. AI concerns weigh on dollar
The dollar index was slightly lower at 101.85 as Treasury yields fell and investors sought safe-haven assets following an equity selloff that renewed concerns about AI spending after Alphabet's results. The 10-year Treasury yield was 4.8958% and the 30-year yield was 5.2623%, both at their lowest in more than a month.
