The Japanese yen rose on Friday after newly appointed Finance Minister Satsuki Katayama said the government is monitoring currency movements with a high degree of sensitivity, even as the yen heads for its weakest monthly performance against the dollar since July.

The move followed a volatile week for Japans currency, which briefly strengthened after US Treasury Secretary Scott Bessent criticized the Bank of Japan for not hiking rates quickly enough, only to fall again after the central bank left its policy unchanged as widely expected.

Katayama also walked back comments she made in March, when she estimated the yens fair value between 120 and 130 per dollar. She said Thursday that such remarks were no longer appropriate given her current role overseeing monetary policy a statement that dampened optimism among traders betting on a stronger yen.

Tokyo inflation adds pressure on the Bank of Japan

Government data released Friday showed Tokyos core consumer prices rose 2.8% in October from a year earlier, exceeding forecasts and keeping inflation above target, complicating the BOJs task of determining when to begin tightening policy.

In European trading, the yen edged higher, with the dollar trading at 154.28 yen, slightly above a nine-month low for the Japanese currency. The yen has fallen about 4% against the dollar in October its worst monthly showing since July and also hit a record low against the euro.

Were reaching the point where yen weakness has become a genuine political concern in Japan, said Sim Moh Siong, FX strategist at Bank of Singapore.

Meanwhile, the US Dollar Index held near a three-month high, supported by risk-off sentiment following a busy week of central-bank decisions, tech earnings, and an initial trade-truce deal between the US and China.

Risk aversion is playing in favor of the dollar, said Rodrigo Catril, currency strategist at National Australia Bank. Theres still uncertainty over whether the Fed will actually deliver another rate cut in December.

According to CMEs FedWatch tool, the probability of a December rate cut has fallen to about 75%, down from more than 90% a week earlier.

Euro steady, pound weakens

The euro rose 0.1% to $1.1572 after the European Central Bank kept rates unchanged at 2% for a third straight meeting, saying monetary policy is well positioned as economic risks ease. Still, the euro remains down roughly 1.4% against the dollar for October.

The British pound slipped to $1.3145 amid rising political pressure on UK Finance Minister Rachel Reeves. Sterling is heading for a monthly loss of about 2.3%, while gilt yields fell as investors sought safety ahead of Novembers budget announcement and its potential economic fallout.

The UKs economic outlook looks fragile, and markets dont like uncertainty, said Fiona Cincotta, senior market analyst at City Index. The government is in a difficult spot with very few options and thats showing up in sterlings weakness.

In Asia, the dollar held steady around 7.111 yuan in offshore trading, even after data showed Chinas factory activity contracted for a seventh consecutive month in October, missing expectations.