Global Markets React to BOJ's Cautious Approach and U.S.-China Trade Developments

The yen weakened after the Bank of Japan kept rates unchanged, showing caution in monetary policy. Meanwhile, the dollar remained strong amid expectations of continued U.S. rate cuts. Global markets are also focused on trade talks between the U.S. and China, with investors optimistic about a potential deal.

The yen declined on Thursday following the Bank of Japan's (BOJ) decision to maintain unchanged interest rates. This move left the dollar firm, as traders adjusted their projections for further U.S. rate cuts this year. Additionally, market participants are keenly awaiting details on a possible trade agreement between Washington and Beijing.

The BOJ, concluding its two-day monetary policy meeting, retained its policy rate at 0.5%, signaling a cautious stance as only two policymakers advocated for a hike. Consequently, the yen fell 0.15% against the dollar to 152.97, its lowest in eight months. Meanwhile, the euro rose 0.3% to 177.72 yen, and sterling increased 0.26% to 201.93 yen.

In broader markets, there was muted reaction post the much-anticipated meeting between U.S. President Donald Trump and China's leader Xi Jinping in South Korea, with investors remaining positive on the potential thaw in trade relations. This optimism, alongside hawkish comments from the Federal Reserve, kept the dollar steady, presenting a mixed picture of international financial landscapes.

(With inputs from agencies.)