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Asia markets mostly lower; yen strengthens against the dollar

Asia markets were mostly lower on the final trading day of the week, as investors digested major central banks' decisions to stand pat on their monetary policies.

Stateside, the U.S. Federal Reserve opted not to raise interest rates on Wednesday local time, citing a slowdown in economic activity in the country. Then on Thursday, the Bank of Japan (BOJ) unexpectedly kept its policy steady, disappointing a substantial section of the market that was betting on further stimulus.

Australia's ASX 200 reversed early losses to close up 26.77 points, or 0.51 percent, at 5,252.20, adding 0.3 percent for the week. The index was supported on Friday by gains in the heavily-weighted financials sub-index, as well as the energy and materials sub-indexes.

In South Korea, the Kospi finished down 6.78 points, or 0.34 percent, at 1,994.15, while in Hong Kong, the Hang Seng index fell 1.37 percent as of 2:50 p.m. HK/SIN. Chinese mainland markets were mixed, with the Shanghai composite dropping 7.13 points, or 0.24 percent, at 2,938.45, while the Shenzhen composite finished nearly flat.

Japanese markets are closed on Friday for a public holiday. The Japanese benchmark index tumbled 3.61 percent in the previous session, while the yen strengthened rapidly, following the BOJ decision. The Nikkei 225 lost more than 5 percent for the week.

As of 3:11 p.m. HK/SIN, the yen traded at 107.14 against the dollar, compared with levels over 108 earlier in the session. That followed the pair's fall of as much as nearly 3 percent Thursday afternoon local time from levels over 111. The pair traded at lows not seen since October 2014.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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"It was certainly surprising to me that they basically did nothing new, especially when there were market expectations for them to do something else on the equity purchases or other easing measures," Eric Stein, co-director of global fixed income at Eaton Vance, told CNBC via email Friday about the BOJ decision.

Stein said for the past few weeks, BOJ governor Haruhiko Kuroda had "seemed frustrated with the yen strength," and that his rhetoric had helped "move the currency from 108 to the 111s [level] and now its back to 108" against the dollar.

Kathy Lien, managing director of foreign exchange strategy for BK Asset Management said the main takeaway from the BOJ meeting is that "the Japanese feel no immediate pressure to use monetary policy or currency intervention to turn around the economy."

JAPAN YEN
Haruyoshi Yamaguchi | Bloomberg | Getty Images

In the currency market, the dollar index, which measures the dollar against a basket of currencies, was down 0.34 percent at 93.439, compared with the 95 level it touched earlier in the week.

"The U.S. dollar looks unlikely to break significantly lower," said Angus Nicholson, a market analyst at IG, adding it would not take all that much good economic news out of the U.S. to start seeing the dollar regain strength.

The Australian dollar traded at $0.7654 in afternoon trade, compared with Thursday's finish at $0.7625.

In China, the yuan was flat against the dollar at 6.4760. Before market open, the People's Bank of China (PBOC) fixed the yuan mid-point at 6.4589, compared with Thursday's fix at 6.4954. Friday's fix guided the yuan higher at the sharpest pace since 2005.

China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.

Iris Pang, a senior economist for Greater China at Natixis, said, "The central bank is trying to fix the dollar/yuan by following the moves of major currencies against the dollar."

In company news, shares of Australian detention center operator Broadspectrum soared 32.14 percent after reports said its board has approved a takeover bid from Spanish group Ferrovial.

Oil prices advanced during Asian hours, with U.S crude futures retracing earlier losses of 0.39 percent to trade up 0.46 percent at $46.24 a barrel. It rose 1.54 percent overnight. Global benchmark Brent futures also advanced 0.29 percent to $48.28, after erasing an over 0.5 percent loss from the morning session.

Energy plays in the region closed mixed, with shares of Santos advancing 2.13 percent and Woodside Petroleum higher by 2.24 percent, while Chinese mainland listed shares of PetroChina dropped 1.46 percent.

In the metal commodities space, Shanghai steel futures were up 5.97 percent, while the Dalian iron ore futures added 5.96 percent. Chinese metal plays closed mixed, with Aluminium Corp dropping 0.24 percent, while Baotou Steel was up 0.66 percent.

Major U.S. indexes closed down, with the Dow Jones industrial average lower by 1.17 percent, the Nasdaq composite down 1.19 percent and the S&P 500 off by 0.92 percent.

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