Yen falls for second day as Japanese economic data disappoints
Yen slips to 142.4 as weak data, BoJ caution weigh on sentiment.
The Japanese yen fell for a second consecutive day on Wednesday, slipping to 142.4 per U.S. dollar amid fresh signs of economic weakness and cautious sentiment ahead of the Bank of Japan’s upcoming policy decision.
Japan’s March industrial production fell more than expected, while retail sales growth underperformed forecasts — underscoring sluggish domestic demand and casting doubt on the strength of the country’s post-pandemic recovery.
The soft data weighed on investor sentiment and put renewed pressure on the yen, which has already faced headwinds from widening interest rate differentials with the U.S.
BoJ likely to hold, wary of tariff impact
Markets now await the Bank of Japan’s policy announcement, with expectations for rates to remain unchanged at 0.5%. Analysts anticipate a cautious tone from policymakers as they assess the potential impact of new U.S. tariffs on Japanese exports. As a major export-driven economy, Japan is particularly sensitive to trade policy shifts, and the central bank is unlikely to tighten further without clearer signs of sustained domestic inflation and growth.
U.S.–Japan trade talks offer glimmer of relief
Meanwhile, U.S. Treasury Secretary Scott Bessent said Tuesday that the Trump administration had held “substantial talks” with Japan on a potential trade agreement. While no details have been finalized, the comments raised hopes for a possible easing of bilateral trade tensions that have clouded the outlook for Japanese exporters.
The yen, often viewed as a safe-haven currency, has lost ground this week as easing global tensions and weak domestic fundamentals shift investor preference elsewhere. Further direction will likely hinge on the Bank of Japan’s policy tone and any concrete developments from the U.S.–Japan trade dialogue.
Recently we wrote that the U.S. Dollar Index (DXY) has remained locked within a narrow 1% range between 98.50 and 99.50 for six consecutive trading days.
