US FX Wrap: Dollar mixed as AI growth concerns build into week-end, yen firms after BoJ hold

USD was mixed against major peers on Friday as AI growth concerns accelerated to end the week, with markets once again underwhelmed by the latest round of tech earnings (INTC, AMZN, SNDK). Additionally, the FT reported that Blackstone said Anthropic is expected to get a high junk rating after its IPO, having previously signalled an expectation for Anthropic to get an investment-grade rating by year-end. The report sparked an extension of the rally at the short end of the curve, weighing on USD performance, although the long end was sold. There were multiple Fed speakers on Friday, with remarks from dissenters Cook and Hammack still awaited. Fed's Logan argued that higher market rates are a message that investors believe monetary policy has work to do, adding that "Long-term rates have risen, but do not represent as much of a drag on the economy as might be expected."

US data showed employment costs eased slightly in Q3, as expected, as did wages and benefits. DXY is set to finish the week slightly firmer at 101.89, though off the 102.49 WTD highs.

CAD, JPY, GBP and CHF were all firmer,AUD and NZD were little changed, and the EUR was marginally weaker.

Overnight, the BoJ held rates at 1.25% as expected, in an 8-1 vote, with Takata opting for a hike. In the press conference, Ueda noted that it is too early to declare the inflation target achieved, as inflation must remain stable and sustainably around 2%, and that medium- to long-term inflation expectations remain far from being firmly anchored at 2%. USD/JPY hit lows of 156.96 before paring losses to trade around 157.46.

For the Euro, German CPI cooled more than expected to 2.8% Y/Y (exp. 3.0%), while Italian HICP ran hot at 5.6% (exp. 4.6%) and French HICP topped forecasts at 3.8% (exp. 3.6%). EZ Q3 GDP beat at 0.4% Q/Q (exp. 0.2%). On the ECB front, Makhlouf said he seriously considered a hike this week, Kocher said the Bank must hike if conditions don't improve soon, and Panetta said more hikes may be needed.