The yen held firm on Friday after a safe-haven rally, with USD/JPY last trading at 157.10 yen. Japan's September core inflation rose above the Bank of Japan's target, while Brent crude trading above $114 a barrel kept oil in focus.
The yen strengthened to its highest level in more than a month on Friday, as USD/JPY fell as low as 156.06. Investors sought safety amid concerns about the sustainability of artificial intelligence-related investments and escalating Middle East tensions.
USD/JPY last traded 0.2% higher at 157.10 yen, after dropping nearly 1% in the previous session. The pair was set for a 0.6% weekly fall.
Japan inflation tops the central bank's target
Japan's September core consumer inflation accelerated to 2.1% year-on-year from 1.7% in August, returning above the Bank of Japan's 2% target for the first time in nine months.
An index excluding both fresh food and energy rose 2.4%, up from 1.9% in August and above market expectations. That strengthens the case for further monetary tightening.
Oil and Treasury yields shape the dollar
The U.S. dollar, meanwhile, edged higher. The US Dollar Index traded 0.1% higher at 101.86, remaining near a three-week low, and was set to end the week largely flat.
Falling U.S. Treasury yields reduced support for the greenback. The benchmark 10-year Treasury yield approached a one-month low of 4.953%, reflecting demand for safer assets.
Oil also stayed a concern. Brent crude was trading above $114 a barrel after surging 4% on Thursday as attacks in Saudi Arabia heightened fears of supply disruptions. Higher crude prices threaten to fuel inflation, particularly for energy-importing economies such as Japan, India and South Korea.
Central bank decisions loom
Next week brings a run of policy decisions. The Federal Reserve is expected to hold rates at 3.75%-4.00% on October 28, while the European Central Bank and Bank of Japan are due to announce decisions on October 29 and 30, respectively.
Source: Investing.com
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