Yen Rises Amid Risk-off Mood, BoJ Rate Hike Bets

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Friday amid risk-off mood, as traders digested the latest settlements on the trade tariff front and remained caution as they awaited more clarity on the developments in trade negotiations with other trade partners.

Growing anticipation of another interest rate hike by the Bank of Japan (BoJ) in 2025, recent government remarks and the possibility of a US-Japan trade agreement, also led to the upturn of the safe-haven currency JPY.

In economic news, data from the Ministry of Economy, Trade and Industry showed that Japan industrial production expanded for the second straight month in March, revised from a decline estimated initially. Industrial production rose 0.2 percent month-on-month in March, slower than February's 2.3 percent increase. In the initial estimate, the rate of decrease was 1.1 percent.

On a yearly basis, industrial production advanced 1.0 percent versus a 0.1 percent gain in the prior month.

Further, data showed that capacity utilization dropped 2.4 percent, extending February's 1.1 percent decrease.

Also, data from the Cabinet Office showed that the Japanese economy contracted a seasonally adjusted 0.2 percent on quarter in the first quarter of 2025, missing expectations for a decline of 0.1 percent following the 0.6 percent gain in the three months prior. On an annualized basis, GDP was down 0.7 percent - again missing forecasts for a drop of 0.2 percent following the upwardly revised 2.4 percent increase in the previous quarter.

Capital expenditure was up 1.4 percent on quarter, exceeding expectations for an increase of 0.8 percent, which would have been unchanged from the preceding three months. External demand was down 0.8 percent on quarter, while private consumption was flat.

In the Asian trading today, the yen rose to a 9-day high of 162.46 against the euro and an 8-day high of 103.91 against the Canadian dollar, from yesterday's closing quotes of 162.93 and 104.31, respectively. If the yen extends its uptrend, it is likely to find resistance around 161.00 against the euro and 102.00 against the loonie.

Against the pound and the U.S. dollar, the yen advanced to 1-week highs of 193.04 and 144.94 from Thursday's closing quotes of 193.66 and 145.57, respectively. On the upside, 190.00 against the pound and 141.00 against the greenback are seen as the next resistance levels for the yen.

The yen edged up to 174.08 against the Swiss franc, from yesterday's closing value of 174.37. The next resistance level for the yen is seen around the 171.00 region.

Looking ahead, U.S. building permits, housing starts, import and export prices, all for April, U.S. University of Michigan's consumer sentiment index for May and U.S. Baker Hughes oil rig count data are slated for release in the New York session.