(Adds comment, U.S. Treasury currency report; updates prices)
BOJ keeps rates unchanged, sinks yen broadly
Yen poised for largest weekly gain vs euro in three years
Yen falls to six-month low vs dollar
U.S. 1-year inflation outlook falls -consumer sentiment survey
No major trading partner manipulated their currencies -Treasury
The yen plunged to a 15-year low against the euro on Friday after the Bank of Japan (BOJ) kept its ultra-low interest rate policy and forecast that inflation will slow later this year, in contrast with the European Central Bank's (ECB) rate hike on Thursday.
The Japanese unit also fell against the greenback, dropping to a six-month trough. As widely expected, the BOJ maintained its -0.1% short-term rate target and a 0% cap on the 10-year bond yield set under its yield curve control (YCC) policy.
BOJ Governor Kazuo Ueda said he expects inflation to moderate, but the "pace of decline is somewhat slow."
The yen fell broadly following the decision and hit a fresh 15-year low of 155.22 per euro EURJPY=EBS . It was poised for its biggest weekly decline against the euro in three years. The euro was last up 1.1 at 155.16 yen.
The dollar rose 1.1% against the Japanese currency to 141.795 JPY=EBS , after earlier touching its highest since November. It was on pace for its largest daily percentage gain since late April.
"The Bank of Japan added fuel to that dollar fire today by being on hold again," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull in Toronto.
Elsewhere, the euro was poised for its best week against the dollar since June after the ECB raised borrowing costs to a 22-year high and hinted at further tightening.
That and some soft U.S. data saw the dollar fall as traders scaled back bets on how high U.S. rates would need to rise.
The euro EUR=EBS was flat against the greenback at $1.0940 after earlier touching a five-week high, having surged over 1% on Thursday following the rate hike and forward ECB guidance.
ECB President Christine Lagarde told a news conference another rate hike in July was highly likely and the central bank still has "ground to cover" to stave off high inflation.
Sterling GBP=D3 rose 0.4% to $1.2831 after earlier rising to its highest since April 2022, as traders ramped up bets the Bank of England will raise rates for the 13th straight meeting next week.
0#BOEWATCH FED FACES GRIM DATA The ECB's policy decision came a day after the Federal Reserve left rates unchanged, snapping a string of 10 consecutive hikes. However, the Fed also signalled that rates may still need to rise by as much as 50 basis points by the end of this year.
However, recent data showed U.S. economic activity is slowing and inflation is cooling, challenging the Fed's still-hawkish stance.
On Friday, data showed ebbing inflation expectations that lifted U.S. consumer sentiment to a four-month high in June. The survey's reading of one-year inflation expectations dropped to 3.3% this month from 4.2% in May.
In afternoon trading, the dollar index edged up 0.1% to 102.24 =USD , after falling to a five-week low on Thursday. It was on track for its weakest weekly performance since January.
"Beyond July, we don't think there's going to be another hike, but the first cut would be in December," said Vassili Serebriakov, FX strategist at UBS in New York.
"We think the economy is going to slow meaningfully in the second half, with inflation coming in below what the Fed is expecting."
Also on Friday, the U.S. Treasury said it found that no major U.S. trading partners had manipulated their currencies for an export advantage, adding it ended "enhanced analysis" for Switzerland after the country met only one of three manipulation criteria.
The FX market showed little reaction to the news.
======================================================== Currency bid prices at 3:45PM (1945 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 102.2600 102.1400 +0.13% -1.189% +102.4200 +102.0000 Euro/Dollar EUR=EBS $1.0941 $1.0946 -0.03% +2.12% +$1.0971 +$1.0918 Dollar/Yen JPY=EBS 141.7650 140.3000 +1.05% +8.13% +141.8800 +139.8500 Euro/Yen EURJPY= 155.12 153.52 +1.04% +10.56% +155.2200 +153.1000 Dollar/Swiss CHF=EBS 0.8939 0.8920 +0.23% -3.31% +0.8949 +0.8902 Sterling/Dollar GBP=D3 $1.2831 $1.2783 +0.39% +6.11% +$1.2848 +$1.2771 Dollar/Canadian CAD=D3 1.3192 1.3222 -0.22% -2.63% +1.3239 +1.3178 Aussie/Dollar AUD=D3 $0.6875 $0.6883 -0.11% +0.87% +$0.6900 +$0.6856 Euro/Swiss EURCHF= 0.9778 0.9758 +0.20% -1.18% +0.9782 +0.9747 Euro/Sterling EURGBP= 0.8526 0.8561 -0.41% -3.60% +0.8565 +0.8522 NZ NZD=D3 $0.6232 $0.6235 -0.03% -1.83% +$0.6247 +$0.6211 Dollar/DollarDollar/Norway NOK=D3 10.5430 10.4910 +0.54% +7.48% +10.6070 +10.4810 Euro/Norway EURNOK= 11.5415 11.4805 +0.53% +9.99% +11.5975 +11.4708 Dollar/Sweden SEK= 10.6478 10.5974 +0.59% +2.31% +10.6588 +10.5609 Euro/Sweden EURSEK= 11.6514 11.5825 +0.59% +4.50% +11.6585 +11.5828 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5EThe race to raise rates https://tmsnrt.rs/3XazXbE
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