The Japanese yen weakened against other major currencies in the Asian session on Wednesday, after the Bank of Japan left its interest rate unchanged after hiking the rate by a quarter-point early this year, amid rising concerns about the U.S. trade policies and its impact on economic activity and prices.
At a two-day meeting that ended on Wednesday, the policy board, governed by Kazuo Ueda, unanimously decided to maintain the uncollateralized overnight call rate at around 0.5 percent, which was the highest level since the global financial crisis in 2008.
The bank had raised the benchmark rate to the current level from 0.25 percent in January.
The BOJ Governor Kazuo Ueda's commented at his post-meeting news conference held today, "If the economy and prices move in line with our forecast, we will continue to raise our policy rate and adjust the degree of monetary support as current real interest rates are very low."
Concerns about the rising uncertainty and impact of President Donald Trump's trade policies continued to weigh along with worries about the economic outlook.
While the Fed is expected to leave interest rates unchanged and maintain its hawkish outlook amid economic uncertainties, traders will look to the accompanying statement as well as officials' latest projections for clues about the outlook for interest rates.
Meanwhile, Trump said he would be imposing both broad reciprocal tariffs and additional sector-specific tariffs on April 2.
In economic news, the value of overall core machine orders in Japan was down a seasonally adjusted 3.5 percent on month in January, the Cabinet Office said on Wednesday - coming in at 857.9 billion yen. That missed forecasts for a decline of 0.1 percent following the 0.8 percent decline in December.
On a yearly basis, orders rose 4.4 percent, again missing expectations for an increase of 6.9 percent, following the 4.3 percent gain in the previous month. For the first quarter of 2025, core machinery orders are seen lower by 2.2 percent on quarter and up 0.5 percent on year at 2.60 trillion yen.
The total value of machinery orders received by 280 manufacturers operating in Japan jumped 9.8 percent on month and 19.4 percent on year in January to 3.265 trillion yen.
Meanwhile, Japan posted a merchandise trade surplus of 584.5 billion yen in February, the Ministry of Finance said on Wednesday. That was shy of expectations for a surplus of 722.8 billion yen following the 2.736 trillion-yen deficit in January.
Imports were down 0.7 percent on year at 8.606 trillion-yen, missing forecasts for a gain of 0.1 percent following the 16.2 percent jump in the previous month. Exports were up an annual 11.4 percent to 9.191 trillion-yen, missing forecasts for a gain of 12.1 percent after adding 7.3 percent a month earlier.
Additionally, data from the Ministry of Economy, Trade and Industry showed that Japan's industrial production decreased for the third straight month as initially estimated in January. Industrial production fell a seasonally adjusted 1.1 percent month-on-month in January, following a revised 0.3 percent fall in December.
On a yearly basis, industrial production recovered to 2.2 percent in January, revised downwardly from 2.6 percent, after falling 2.2 percent in December.
In the Asian trading now, the yen fell to a 1-1/2-month low of 170.86 against the Swiss franc and a 2-week low of 150.02 against the U.S. dollar, from yesterday's closing values of 170.49 and 149.44, respectively. If the yen extends its downtrend, it is likely to find support around 174.00 against the franc and 155.00 against the greenback.
The yen dropped to 163.80 against the euro and 194.56 against the pound, from Tuesday's closing values of 163.49 and 194.28, respectively. The yen may test support around 165.00 against the euro and 196.00 against the pound.
Against Australia, the New Zealand and the Canadian dollars, the yen edged down to 95.26, 87.11 and 104.72 from yesterday's closing quotes of 95.07, 86.95 and 104.52, respectively. On the downside, 196.00 against the pound, 98.00 against the aussie, 89.00 against the kiwi and 108.00 against the loonie are seen as the next support levels for the yen.
Looking ahead, Eurostat is scheduled to issue euro area final inflation data for February at 6:00 am ET in the European session. Final inflation is seen at 2.4 percent, unchanged from the flash estimate, and up from 2.5 percent in January.
In the New York session, U.S. MBA mortgage approvals data and U.S. EIA crude oil data are slated for release.
At 2:00 pm ET, the Federal Open Market Committee's (FOMC's) second policy meeting is largely awaited. After its two-day meeting, which concludes today, the U.S. Federal Reserve's rate-setting committee anticipates maintaining the federal fund rate at a range of 4.25 to 4.5 percent.
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Forex News
March 21, 2025 09:58 ET Central banks, led by the U.S. Fed, were in focus this week as they announced their latest policy moves. The Fed revealed the latest interest rate decision and outlook mid-week. Economic data released this week in the U.S. included retail sales figures for February. In Europe, central banks of the U.K. and Switzerland, among several others, announced their rate decisions. The Bank of Japan was in the news in Asia as it revealed its latest policy decision.