Japanese Yen Falters Amid Weaker Trade Data

The Japanese Yen pared its gains against the US Dollar on Thursday due to weaker-than-expected foreign trade data from Japan. This offset the greenback's broader softness, causing the USD/JPY pair to rebound from earlier losses.

Japan's Ministry of Finance reported a merchandise trade deficit of ¥987 billion for March, exceeding market forecasts of a ¥500 billion shortfall. Exports rose 7.3% year-on-year, below the expected 8.0% increase, while imports surged 8.9%, driven by higher energy costs and a weaker yen.

The disappointing figures dampened optimism that the Bank of Japan would accelerate interest rate hikes, which had been supporting the yen in recent weeks. Market participants now see a slower policy tightening path, reducing the currency's yield appeal relative to the US dollar.