Japanese inflation rose slightly in August, with prices up 2.8 percent year-on-year, official data showed Friday, hours before the Bank of Japan was widely expected to leave interest rates unchanged.

Traders betting on further recovery in Japanese equities are looking to any steer from the Bank of Japan that may cap the yen’s gains and support exporters.

Japan's core consumer inflation accelerated for the fourth straight month in August and tracked comfortably above the central bank's 2% target, data showed on Friday, keeping alive expectations for further interest rate hikes.

Bank of Japan Governor Kazuo Ueda pushed the likelihood of an October rate hike further to the sidelines Friday with a cautious message that pointed to ongoing concern over the market meltdown that followed July’s rate increase.

The yen pared its losses on Friday as the Bank of Japan (BOJ) sounded optimistic about growth and signalled it will be judicious about further policy tightening, while the dollar had its own problems as markets priced in more rapid U.

NEW YORK/LONDON >> The dollar strengthened against the yen today after the Bank of Japan left interest rates unchanged and indicated that it was not in a hurry to hike them again.