Yen Rebounds as BOJ Maintains Optimistic Growth Outlook Amid Policy Tightening Signals

The yen trimmed its losses on Friday as the Bank of Japan (BOJ) expressed optimism about growth and signaled cautious future policy tightening. The euro gained against major currencies, while the dollar faced pressures from anticipated U.S. rate cuts. Investor focus remains on BOJ Governor Kazuo Ueda's future plans.

The yen cut its losses on Friday as the Bank of Japan (BOJ) remained optimistic about economic growth and indicated a cautious approach to future policy tightening. Meanwhile, the dollar came under pressure as markets anticipated more rapid U.S. rate cuts.

The yen had a challenging week, with the euro rising 2.2% to 159.46 as speculators booked profits on strong yen positions. The euro also strengthened against the dollar, firming to $1.11635 and nearing its August peak of $1.1201. In overnight trading, the dollar fell 0.3% to 142.21 yen after reaching a high of 143.95.

The BOJ maintained its current policy, keeping the overnight call rate target at 0.25%, and stated that the economy is on track for moderate recovery, though inflation is moderating. BOJ Governor Kazuo Ueda is expected to signal a cautious but gradually hawkish stance, which could influence the dollar-yen exchange rate. In contrast, China left its lending rates unchanged, and the U.S. dollar index remained at 100.59, just above a one-year low.

(With inputs from agencies.)