Yen steady before BOJ, AI jitters drive Treasury rally, weigh on dollar

The yen weakened a touch on the day to ​around 157.815 per dollar and was on track for a 0.2% decline this month against the dollar.

The BOJ will wrap ​up a packed 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.

But ​they are by no means done, with energy prices near multi-month highs and no resolution to the conflict in the Middle East in ​sight. The Bank of England and the Reserve Bank of Australia will be in focus next week, with investors watching their decisions.

"I think this is just a temporary pause.

The global tightening cycle is still going to continue and that will continue to be a driver for FX markets," said Khoon ​Goh, head of Asia research at ANZ."The big question is as we enter 2027, whether or not we might end up ​with potentially even more hikes if the inflation stays elevated.

"The euro was last flat at $1.1185 against the greenback after briefly dipping to its lowest since ‌May ⁠2025 in the previous session, and was on track for a 1.2% monthly drop. Sterling strengthened 0.1% to $1.3390, and was up 1% for the month.

The Australian dollar was little changed at $0.7030 and was up 1.2% for October. The kiwi weakened slightly to $0.5626 and was flat for the month. AI JITTERS DRIVE FLIGHT TO SAFETYThe dollar index, which measures the US currency against a basket of peers, was a shade ​weaker at 101.77.

It was set ​for a 0.3% gain this ⁠month, marking a second straight monthly rise. The greenback is largely weighed by a dip in US Treasury yields as the safe-haven assets attract new bids.

Results from Alphabet (GOOGL.O), opens new tab earlier in the week rekindled worries about ​AI spending and pushed broader stock markets lower, triggering a selloff in equities and making safe-haven ​bonds more attractive.

The ⁠yield on the benchmark US 10-year Treasury note was last 4.8958% and that on the 30-year bond fell to 5.2623%, both at their lowest in over a month. "The market reaction looked different from a conventional energy-driven risk-off episode," Sim Moh Siong, FX strategist at OCBC said in ⁠a note.

"Rather ​than supporting the USD and pushing US yields higher, US-centric AI concerns were ​accompanied by lower Treasury yields and a softer or broadly subdued USD."Elsewhere, oil prices remained elevated, with Brent crude futures on track for an 11.5% gain in their ​fourth straight month of gains, the longest streak in over two years.