Forex News: Yen Falls As BoJ Holds Rates

Yen Falls As BoJ Holds Rates

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Friday, after the Bank of Japan maintained its key interest rate, as widely expected, after raising the rate in June.

The policy board voted 8-1 to retain the interest rate at 1.00 percent. The bank had raised its benchmark rate by 25 basis points in June.

In the Outlook for Economic Activity and Prices, the bank said there is risk of underlying inflation deviating upward above the 2 percent target.

Inflation for the fiscal 2026 was projected at 2.5 percent but down from 2.8 percent estimated previously, while the projection for the fiscal 2027 was lifted to 2.4 percent from 2.3 percent.

For the fiscal 2028, inflation is seen at 2.0 percent, unchanged from the April forecast.

Asian markets traded higher boosted by markets in Japan, South Korea and Taiwan amid the rebound in technology or semiconductor stocks as major global firms reinforced aggressive AI investment plans renewed optimism over AI spending after major US tech firms reinforced their aggressive investment plans.

The ongoing talks between Iran and Oman over the Strait of Hormuz management also induced positivity on the resumption of the free flow of gulf crude oil.

U.S. Central Command announced completing a heavy wave of strikes against Iran in response to attempts by Iran's Islamic Revolutionary Guards Corps to destroy U.S. bases in Jordan.

Despite wanting to hit Iran harder, yesterday U.S. President Donald Trump stated that he had allowed talks to continue.

Middle East tensions continue to dictate markets as the scenario alternates between temporary ceasefires and the sudden exchange of attacks.

In the meantime, Japanese Finance Minister Satsuki Katayama emphasized continued coordination with the United States about currency movements while reiterating that financial authorities are ready to enter the foreign exchange market at any time.

As global tensions ease, the safe-haven yen started weakening against its major peer currencies. Positive diplomatic developments, such as the advancement of negotiations between the United States and Iran to ensure calm in the Strait of Hormuz, have eased opinion regarding global risk.

Furthermore, senior Hamas leaders have verified that U.S. President Donald Trump's announcement of a historic agreement mandating the disarmament of Hamas and the evacuation of Israeli soldiers from Gaza has further reduced market fear.

In the Asian trading today, the yen fell to 185.17 against the euro, 216.32 against the pound and 199.32 against the Swiss franc, from yesterday's closing quotes of 184.59, 215.62 and 198.79, respectively. If the yen extends its downtrend, it is likely to find support around 188.00 against the euro, 220.00 against the pound and 202.00 against the franc.

Against the U.S., Australia, the New Zealand and the Canadian dollars, the yen slid to 160.88, 112.99, 94.42 and 114.74 from Thursday's closing quotes of 160.19, 112.52, 94.10 and 114.32, respectively. The yen may test support near 164.00 against the greenback, 115.00 against the aussie, 95.00 against the kiwi and 117.00 against the loonie.

Looking ahead, German unemployment rate and Eurozone CPI data, for July, are due to be released in the European session.

In the New York session, Canada GDP data for May, U.S. employment cost for the second quarter, U.S. Chicago PMI for July, U.S. University of Michigan consumer sentiment for July and U.S. Baker Hughes oil rig count data are slated for release.

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