Yen exchange rate today
According to Lao Dong, on May 2, the Japanese Yen (JPY) recovered slightly against the US Dollar (USD) after hitting bottom in previous sessions. The main reason is that investors are temporarily waiting for the US non-farm Payrolls (NFP) report to be released, causing JPY sales to slow down somewhat.
The USD/JPY pair is currently fluctuating around 146.00 a high level for the day but has not had a strong breakthrough due to the temporary stability of the USD price. However, the Yen's gains are still limited by the dovish monetary policy of the Bank of Japan (BoJ).
Yen faces future decline
According to FXStreet, the BoJ kept interest rates unchanged at 0.5% as expected and adjusted down its economic growth and inflation forecast for this year. The BoJ is now expecting the Japanese economy to grow by 0.5% instead of 1.1% as before, and forecasts inflation in 2025 to be 2.2%, lower than the initial figure of 2.4%. Governor Kazuo Ueda said uncertainty over global trade policies could see Japan achieve its inflation target later than expected. These developments have made investors no longer expect the BoJ to soon raise interest rates in June or July as before.
In addition, risk-off sentiment is returning to the market as positive information about the possibility of resuming US-China trade negotiations has appeared. Chinese media revealed that the Trump administration has contacted Beijing to find a way to ease trade tensions. This has caused demand for safe-haven assets such as the Yen to decline.
In the country, Japan's unemployment rate in March increased slightly to 2.5%, but overall the whole fiscal year 2024 recorded an improvement due to labor shortage.
Meanwhile, the US continues to release weak economic data, from the increase in unemployment claims to the continued narrowing PMI manufacturing index. The first quarter GDP also unexpectedly decreased, along with cooling inflationary pressures, raising expectations that the Federal Reserve (Fed) will soon cut interest rates.
However, the USD has maintained its upward momentum for three consecutive days thanks to stable market sentiment. Investors are now focusing on the NFP report due later in the day to determine the next direction for US monetary policy.
