The Japanese yen weakened against other major currencies in the Asian session on Thursday, after the Bank of Japan downgraded its outlook for inflation.

The Bank of Japan kept its monetary stimulus unchanged as widely expected, and lowered its inflation expectations for the next three years. Governor Haruhiko Kuroda and his board members decided by a 7-2 majority vote to hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain around zero percent. The board also decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

Also, the timing for annual inflation to reach around 2 percent will likely be around fiscal 2019, the bank said.

As price growth has remained relatively weak, the inflation projection for the fiscal 2017 was lowered to 1.1 percent from 1.4 percent and the outlook for the fiscal 2018 to 1.5 percent from 1.7 percent.

In the fiscal 2019, inflation is forecast to be 2.3 percent instead 2.4 percent.

In other economic news, data from the Ministry of Finance showed that Japan had a merchandise trade surplus of 439.907 billion yen in June. That was shy of expectations for a surplus of 488.0 billion yen following the 204.2 billion yen deficit in May.

Exports were up 9.7 percent on year, topping expectations for an increase of 9.5 percent following the 14.9 percent jump in the previous month. Imports climbed an annual 15.5 percent versus forecasts of 14.4 percent after gaining 17.8 percent a month earlier.

Wednesday, the yen showed mixed trading against its major rivals. While the yen rose against the euro, the pound, and the U.S. dollar, it held steady against the Swiss franc.

In the Asian trading, the yen fell to 129.16 against the euro and 146.05 against the pound, from yesterday's closing quotes of 128.88 and 145.75, respectively. If the yen extends its downtrend, it is likely to find support around 131.00 against the euro and 148.00 against the pound.

Against the Swiss franc and the U.S. dollar, the yen dropped to 117.37 and 112.18 from yesterday's closing quotes of 117.09 and 111.93, respectively. The yen may test support near 119.00 against the franc and 114.00 against the yen.

In today's events, U.K. retail sales data for June, and Eurozone current account data for May, are due to be released later in the day.

The European Central Bank is set to announce its interest rate decision at 7:45 am ET. The bank is expected to keep its refi rate at zero percent and the deposit rate at -0.4 percent. The announcement will be followed by a press conference at 8:30 am ET.

In the New York session, U.S. weekly jobless claims for the week ended July 15, U.S. leading indicators for June, U.S. Federal Reserve Bank of Philadelphia's manufacturing index for July, and Eurozone consumer confidence index for July are slated for release.

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