FX.co ★ Japanese Yen Gains on Strong Inflation Data

The Japanese yen appreciated to over 144 per dollar on Friday, building on gains from the previous session. This rise followed stronger-than-expected core inflation data from Tokyo, underscoring the likelihood of further interest rate hikes by the Bank of Japan. Investors are specifically anticipating a 25 basis point increase in July. On Friday, Bank of Japan Governor Kazuo Ueda indicated that the central bank's recent downward revision of its inflation forecasts was influenced by multiple factors, including increasing global growth risks tied to trade policy uncertainty, a decrease in cost-push inflation, and a significant drop in crude oil prices. He stressed, however, that this updated forecast would not impact the BOJ's short-term interest rate decisions, which continue to focus on achieving the 2% inflation target. Externally, the yen also gained strength from a resurgence in safe-haven demand, following the decision by a US appeals court to reinstate President Donald Trump’s reciprocal tariffs, reversing a prior federal court ruling.