A look at the day ahead in European and global markets from Vidya Ranganathan, breaking news editor for finance & markets
The odds the Bank of Japan would tweak its super-loose policy settings or guidance were long to begin with, and sure enough the BOJ stuck to script with a no-change decision on Friday.
The yen fell in response, even as Finance Minister Shunichi Suzuki spoke of the urgency to contain its fall.
Focus now shifts to what BOJ Governor Kazuo Ueda says in his news briefing, given that the uncertainty over when this laggard in a global monetary cycle will move - torn between opposing domestic and global forces - is gnawing at Japanese markets and global investors.
A majority of economists polled by Reuters expect the central bank will abolish the 10-year yield control scheme by the end of 2024. More than half reckon that the negative interest rate policy will end next year, too.
The 10-year Japanese Government Bond yield hit a 10-year high of 0.745% on Thursday, while the yen is fast heading back towards the new 2023 low of 148.45 per dollar, also hit on Thursday.
World stocks and risk assets had tumbled for a second day on Thursday and U.S. bond yields soared to multi-year highs, as investors adjusted to the Fed's revised rate outlook that hammered home its "higher for longer" stance on interest rates.
MSCI's World Index plunged 1.5% overnight for its biggest fall in six weeks, while its fifth daily decline in a row marked its worst run since March. MSCI's Asia ex-Japan index is flat after Thursday proved to be its worst day since early August, and Wall Street slumped to a three-month low.
Further complicating the picture for investors, however, were the surprisingly dovish decisions from the Bank of England and the Swiss National Bank. Both kept rates on hold on Thursday, confounding expectations they would hike.
In another interesting development for fixed income investors, JPMorgan (NYSE:JPM) said it will include India in its widely tracked emerging market debt index, setting the stage for billions of dollars of inflows into the world's fifth-largest economy.
Speculation that Tokyo will intervene in the FX market to support the yen is unlikely to cool. Prime Minister Fumio Kishida said on Thursday that no option is ruled out in addressing "excessive volatility", and that Japan is communicating with other currency authorities.
European markets have the first purchasing managers index reports for September on Friday, which were kicked off by Australia and Japan, while Germany, France and Britain will join in later in the day.
Key developments that could influence markets on Friday:
UK retail sales
UK, US, Euro zone Flash Sept PMIs, Service PMIs