- The Japanese Yen (JPY) falls for a third day
- The BoJ left rates unchanged but cut growth forecast
- The US Dollar (USD) is rising against its major peers
- US GDP contracted -0.3% in Q1
The US dollar against the Japanese yen (USD/JPY) exchange rate is rising for a third straight day. The pair rose 0.46% in the previous session, settling on Wednesday at 143.02. At 22:00 UTC, USD/JPY trades 1.71% lower at 145.45 and trades in a range of 142.88 to 145.73.
The Japanese yen slid on Thursday after the Bank of Japan’s interest rate decision. The central bank left rates on hold as expected but poured cold water on the prospect of future rate hikes.
In its outlook reports, the Bank of Japan said it expects inflation to remain consistent with its 2% goal around the second half of its outlook. This was extended to include fiscal 2027.
The Bank of Japan also cuts its economic growth projection of 0.5% for this fiscal year, owing to the heightened uncertainty. The markets interpreted the message as dovish, trimming expectations on further monetary policy tightening and pulling the yen lower.
The US Dollar is rising versus its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is 0.73% higher at 100.19 at the time of writing, after rising 0.23% yesterday.
The U.S. dollar is extending gains boosted by optimism about trade tariff deals between the United States and its trading partners. Volume was thinner than usual during the May Day holiday, when many international markets were closed.
Treasury Secretary Scott Bessent and White House economic adviser Kevin Hassett expressed hopes for progress in easing trade tensions.
President Trump announced potential trade deals with India, South Korea, and Japan are on the way, and there is a good chance of reaching an agreement with China as well.
These are big developments that overshadowed yesterday’s weaker-than-expected US GDP data, which saw the economy contract by 0.3%.