SINGAPORE – The dollar sloughed off weak US data to rise on Thursday as investors focused on signs the trade war may be cooling down, while the yen slid as Japan’s central bank cut growth and inflation forecasts and hit pause on interest rates.
The yen fell around 0.5 percent to 143.73 per dollar. The hold on interest rates was unanimous and expected but investors saw the downgraded outlook as reducing the likelihood of future hikes.
“It was nine to zero in terms of holding rates and, basically, to me it sounds like it’s literally a holding pattern,” said Bart Wakabayashi, branch manager at State Street in Tokyo.
“The uncertainty of the US policies is causing everybody to just pause.”
The Bank of Japan projected real GDP growth of 0.5 percent for the 2025-26 fiscal year, down from 1.1 percent.
The dollar has so far been one of the bigger casualties of the trade war as President Donald Trump’s flip-flopping tariffs have hit growth expectations and rattled confidence, notching its largest monthly fall for 2-1/2 years through April.
But it has come off lows as Trump has suspended much of the hit and hinted at deals, including with China, which has the highest levies.
On Thursday that rebound extended, pushing the euro down about 0.2 percent to a two-week low of $1.13 and sterling about 0.2 percent weaker as well to $1.3294.
