Yen Gains Amid BOJ's Inflation Forecasts and Global Tariff Deals

The yen inched upward on Thursday after the Bank of Japan released optimistic inflation forecasts and an unchanged rate decision. Japan's central bank concluded its policy meeting with a unanimous vote to keep short-term rates steady at 0.5%, while updating inflation forecasts for the years through 2027 and noting balanced risks to the price outlook.

Investors now anticipate a potential rate hike from the BOJ later in the year. The yen increased around 0.5% to 148.78 per dollar after the bank's evaluation of the economic trajectory. Khoon Goh from ANZ remarked on the justification for rate hikes, especially given recent developments, including an agreement with the U.S.

In global markets, the dollar approached a two-month peak after the Federal Reserve's Jerome Powell maintained a cautious stance on interest rates. The greenback was set for a modest monthly gain amid easing tariff tensions, while other major currencies like the euro and sterling faced declines. Meanwhile, China's manufacturing sector posted a fourth consecutive month of contraction.

(With inputs from agencies.)