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In
Europe, data showed eurozone business activity expanding in
September at its weakest pace since the start of 2015. But it
was little surprise and had limited impact on policy
expectations and the single currency.
The dollar index was subdued at 95.397 <.DXY>, while the euro
was up 0.1 percent against the dollar at $1.1215 <EUR=>. The
U.S. currency was flat at 100.70 yen <JPY=>, not far from a
nearly four-week low of 100.10 struck on Thursday and on course
to shed more than 1 percent for the week.
"The Fed lowering its medium-term rate guidance path while
keeping a rate hike in play at the end of this year has left the
dollar very finely balanced," said Yujiro Goto, currency
strategist at Nomura.
The Federal Reserve projected a less aggressive rise in rates
next year and in 2018, and cut its longer-run interest rate
forecast to 2.9 percent from 3.0 percent.
Traders said the focus was moving to the first televised U.S.
presidential debate early next week. Markets are mostly
expecting Democratic candidate Hillary Clinton to win the
presidency and have not factored in the implications of a
victory for Donald Trump.
"Indeed, we believe that the markets are rather complacent about
the outcome of the elections and expect growing uncertainty
ahead of the 8 November vote to add to the dollar headwinds,"
Credit Agricole analysts said in a note.
YEN FIRMER
The yen was on track to finish higher on the week against the
dollar and the euro. This was after the BOJ shifted to targeting
interest rates on Japanese government bonds as the focus of its
massive monetary easing program, dropping its explicit target of
increasing base money.
The BOJ's announcement initially sent the dollar up more than 1
percent to 102.79 yen, though the gains unraveled as investors
realized that the central bank would still have an uphill task
to push inflation towards its 2 percent target.
The dollar's proximity to the 100-yen level did not escape the
attention of Japanese authorities, who do not want the yen to
rise sharply.
"We're concerned about recent extremely nervous moves in the
currency market," Chief Cabinet Secretary Yoshihide Suga told a
regular news conference on Friday.
(Additional reporting by Lisa Twaronite; Editing by Andrew
Roche)
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