Yen Rises After BoJ Rate Decision

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Thursday, following the Bank of Japan's decision to increase its inflation forecast for the fiscal year while maintaining steady interest rates.

The BoJ maintained its interest rate and lifted its inflation outlook citing the rise in food prices.

The policy board unanimously decided to hold the uncollateralized overnight call rate to remain at around 0.5 percent.

Previously, the bank had raised the benchmark rate to the current level from 0.25 percent in January.

In the Outlook for Economic Activity and Prices, the bank raised its inflation outlook due to the rise in food prices. For the fiscal 2025, inflation forecast was lifted to 2.7 percent from 2.2 percent.

Inflation forecast for the fiscal 2026 was raised marginally to 1.8 percent from 1.7 percent and that for fiscal 2027 to 2.0 percent from 1.9 percent.

Economic growth projection for the fiscal 2025 was lifted to 0.6 percent from 0.5 percent, while the outlook for the fiscal 2026 and 2027 was retained at 0.7 percent and 1.0 percent, respectively.

Speaking at a press conference following the policy announcement, the BoJ Governor Kazuo Ueda said that the bank will continue to raise policy rate if the economy, prices move in line with forecast, in accordance with improvements in economy, prices.

He also said," Japan-US trade deal is a great progress."

In economic news, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed that Japan's housing starts decreased sharply for the third straight month in June.

Housing starts dropped 15.6 percent year-on-year in June, slower than the 34.4 percent decline in May. Economists had expected a decrease of 16.3 percent.

The seasonally adjusted annualized number of housing starts rose to 647,000 in June from 529,000 in May.

Data also showed that construction orders received by the big 50 contractors grew 22.5 percent annually in June, after a 14.0 percent rise a month ago.

In the Asian trading today, the yen rose to a 4-week high of 169.73 against the euro, from yesterday's closing value of 170.54. The next possible upside target for the yen is seen around the 167.00 region.

Against the pound and the Swiss franc, the yen advanced to near 4-week highs of 196.97 and 182.66 from Wednesday's closing quotes of 197.81 and 183.46, respectively. If the yen extends its uptrend, it is likely to find resistance around 194.00 against the pound and 180.00 against the franc.

Against the U.S. and the Canadian dollars, the yen edged up to 148.59 and 107.48 from yesterday's closing quotes of 149.23 and 107.93, respectively. On the upside, 144.00 against the greenback and 106.00 against the loonie are seen as the next resistance levels for the yen.

Against the Australia and the New Zealand dollars, the yen climbed to 8-day highs of 95.86 and 87.86 from yesterday's closing quotes of 96.17 and 88.15, respectively. The yen may test resistance around 94.00 against the aussie and 86.00 against the kiwi.

Looking ahead, Eurozone unemployment rate for June is due to be released at 5:00 am ET in the European session.

In the New York session, the German flash CPI data for July, Canada GDP data for June, average weekly earnings data for May, U.S. core PCE price index for June, personal income and spending data for June, employment cost data for the second quarter, weekly jobless claims data and U.S. Chicago PMI data for July are slated for release.