FX.co ★ Japanese Yen Weakens for Second Day

The Japanese yen weakened to approximately 147.5 against the dollar on Friday, marking its second day of decline as markets assessed the impact of the recent US-Japan trade agreement. The accord introduces a 15% tariff on Japanese exports to the US, a reduction from the previously threatened 25% by the Trump administration. This provides some relief while still highlighting ongoing trade tensions. Economically, Tokyo's core inflation for July slightly underperformed expectations but remained well above the Bank of Japan's (BOJ) 2% target, fueling speculation about a potential rate hike later in the year. The BOJ is set to announce its policy decision next week and is anticipated to maintain current rates due to concerns about the economic consequences of US tariffs. However, the central bank is expected to upgrade its inflation forecast in its quarterly outlook. Earlier this week, BOJ's Uchida expressed caution regarding further monetary tightening, citing increased uncertainty surrounding US trade policy and its broader global effects.