FX.co ★ Yen Weakens Despite Hawkish BOJ Signals

The Japanese yen declined beyond 143 to the dollar on Tuesday, breaking a three-day upward trend. This dip occurred even as Bank of Japan Governor Kazuo Ueda indicated a readiness to increase interest rates should economic and inflationary momentum gain traction. Ueda noted that Japan's economy is experiencing a gradual recovery, fostered by robust business sentiment and rising corporate profits, albeit with some areas of weakness. The yen also faced external pressures as the US dollar recovered, with markets largely overlooking disappointing US economic data and renewed global trade tensions. Amplifying these concerns, particularly for Japan's steel industry, was President Donald Trump's recent announcement to potentially double tariffs on steel and aluminum imports to 50%, effective June 4. Investors are now turning their attention to upcoming data on labor markets and household spending expected later this week for more clarity on the state of Japan's economic health.