[MARKET ANALYSIS] DXY softer with G10s broadly firmer; GBP leads as EUR/GBP prints a fresh 2026 low, USD/JPY dips after the BoJ

• DXY is lower by 0.1% within a 101.59 to 101.92 range, following Thursday's losses, which came alongside lower yields and the in-line PCE data, although the downside was contained by the better-than-expected Q3 GDP. Today's US docket includes the Q3 Employment Cost Index at 12:30GMT/08:30EDT and Chicago PMI at 13:45GMT/09:45EDT, while Fed's Barkin and Daly are due to speak, alongside Musalem, Hammack (dissenter) and Cook (surprise dissenter).
• USD/JPY sits towards the bottom end of a 157.12 to 157.90 range. The BoJ kept rates at 1.25%, as expected, in an 8-1 vote, with Takata proposing a hike to 1.5%; the Bank said underlying inflation has reached levels consistent with the price target and that risks to prices are skewed to the upside. It also set the pace of its ETF sales at around JPY 860bln a year from January, while the Fiscal 2027 Core CPI forecast was raised to 2.6% (prev. 2.4%). At his press conference, Governor Ueda said it is too early to declare the inflation target achieved and that the Bank will assess risks at every meeting, including December; USD/JPY fell 32 pips to 157.12 on the decision, before paring half of the move. USD/JPY was choppy within a 157.44 to 157.75 range during the presser. Overnight, Tokyo CPI was softer than expected at 2.8% Y/Y (exp. 3.3%), with Core in line at 2.6%. Thereafter, Japanese FinMin Katayama said it is about time to judge that the BoJ's 2% inflation target has been largely achieved.
• EUR/USD is firmer and holds just beneath the 1.1200 mark, within a 1.1171 to 1.1215 range, after gaining in the aftermath of Thursday's ECB hold, with ECB source reports indicating policymakers are prepared to raise rates in December. This morning, ECB's Simkus said holding rates does not mean there are no more hikes to come, while Rehn said the growth and inflation outlook is still very uncertain. French HICP was hotter than expected at 3.8% Y/Y (exp. 3.6%), though French Q3 GDP unexpectedly contracted 0.1% Q/Q (exp. +0.1%); Spanish CPI and GDP were in line. German Q3 GDP topped forecasts at 0.2% Q/Q (exp. 0.1%), while Italian GDP was flat (exp. 0.1% Q/Q), and the German state CPIs all cooled on a Y/Y basis (in line with the expectations for the National figure); EUR/USD saw little reaction to the above data. Ahead, Italian CPI (exp. 4.6% Y/Y) and EZ Q3 GDP (exp. 0.2% Q/Q) are due at 10:00GMT, and German CPI (exp. 3.0% Y/Y) at 13:00GMT, while ECB's Lane speaks at 16:10GMT.
• GBP/USD is firmer and holds above the 1.3400 handle, at the top end of a 1.3370 to 1.3424 range, with the pair eyeing its 200 DMA (1.3427) after topping its 100 DMA (1.3386), where it found resistance yesterday. EUR/GBP is lower within a 0.8340 to 0.8365 range, having printed a fresh 2026 low, with 0.8333 (equivalent to GBP/EUR 1.2000) the next level of note. UK Nationwide House Prices were flat M/M (exp. -0.1%), while the UK docket is light for the remainder of the session.
• The Antipodeans are mixed, with NZD/USD higher within a 0.5624 to 0.5649 range, and AUD/USD flat within a 0.7018 to 0.7043 range. RBNZ's Hansen said a December hike is 50-50, while Silk is said to support a December hike if current conditions persist, Bloomberg reported.
• USD/CNH trades within a 6.6496 to 6.6576 range, printing a fresh 52-week low. The PBoC changed its 7-day reverse repo operations to fixed-quantity, rate-tender auctions, and said other tools will be priced off the overnight reverse repo rate, which was kept at 1.25%.

Sessions of this shape, where the dollar softens broadly but the leadership sits in sterling rather than the euro or yen, tend to reflect idiosyncratic cross drivers rather than a clean USD story, and the tell is in EUR/GBP printing fresh lows rather than in the DXY move itself. In past episodes, a BoJ decision that holds rates but pairs a hawkish dissent, an upside-skewed inflation risk statement, and a raised CPI forecast has typically produced a two-stage yen reaction: an initial dip followed by partial retracement once the press conference lands on the dovish side of the statement, which is the pattern visible here. The stated refusal to declare the inflation target achieved, against explicit commentary from the finance ministry that it largely has been, is the friction point that has historically set up positioning for the next meeting rather than the next session. ECB source talk of December hikes from a central bank on hold has in comparable cycles mattered most at the short end of the EGB curve, with the FX read-through dependent on whether the data flow, hot French HICP against contracting French GDP, resolves cleanly. The RBNZ commentary putting a December hike at even odds places the Antipodeans on the standard pre-meeting knife-edge, where local commentary has tended to move the pair more than the global dollar tone. The PBoC's shift of reverse repo operations to fixed-quantity tender is an operational refinement of the kind that has historically mattered for front-end CNH liquidity pricing rather than for the fix itself, with the fresh 52-week low in USD/CNH the more consequential signal.