Yen Firms After Bank of Japan Holds Steady on Rates

The yen experienced an upward tick on Thursday following the Bank of Japan's decision to keep interest rates steady, while also raising its inflation forecast for the current fiscal year. The central bank concluded its policy meeting with a unanimous vote to maintain short-term rates at 0.5% and revised its inflation prediction upward from 2.2% to 2.7%.

Markets turn their attention to Bank of Japan Governor Kazuo Ueda's impending press conference for more nuanced insights into the rate outlook. Concurrently, the U.S. dollar flirts with a two-month peak, buoyed by Federal Reserve Chair Jerome Powell's cautious approach on rates and support from recent trade deals, enhancing U.S. economic resilience.

The dollar maintained strength, with a 3% monthly index increase amid easing pressure from earlier tariff fears. U.S. trade policies continue to impact global markets, as seen with South Korea and Brazil's recent tariff encounters. Meanwhile, China's manufacturing activity sees contraction, signaling challenges ahead.

(With inputs from agencies.)