Yen's Slide and Dollar's Gain Amid BoJ's Growth Forecast Cut

The Japanese yen weakened following the Bank of Japan's decision to lower growth forecasts and maintain interest rates. This boosted the dollar, which had suffered from ongoing trade wars. Investors are watching for labor market data and trade negotiations, impacting currency movements globally.

The Japanese yen took a tumble on Thursday, falling as much as 1.1% to 144.74 per dollar, its lowest since April 10. This decline came after the Bank of Japan trimmed its growth forecasts amid U.S. tariffs, opting to keep interest rates unchanged.

The bank's dovish stance was anticipated, but the extent of the downgrade surprised investors, reducing the likelihood of imminent rate hikes. The BOJ now projects consumer inflation to hit their 2% target no sooner than the latter half of fiscal 2026, delaying earlier expectations by a year.

Meanwhile, the dollar regained strength, recovering from its trade war-induced slump. President Trump's easing of tariffs improved market sentiment, with the dollar pushing rival currencies like the euro and sterling lower. Speculation centers on potential trade deals with countries including China, as global markets brace for forthcoming U.S. labor market insights.

(With inputs from agencies.)