Today’s markets analysis on behalf of Konstantinos Chrysikos Head of Customer Relationship Management at Kudotrade
29th May 2025
The Japanese yen extended its decline for a fourth consecutive session as risk appetite improved. A U.S. federal court ruling could block President Trump’s tariffs and could lift investor sentiment, further diminishing the yen’s appeal as a safe-haven asset. The dollar gained additional following hawkish signals in the latest Federal Reserve minutes, keeping upward pressure on the dollar-yen exchange rate.
Looking forward, the yen’s outlook could remain clouded, considering growing concerns over Japan’s debt situation and the Bank of Japan’s (BoJ) mounting balance sheet pressures. The BoJ’s unrealised losses on government bond holdings reached a record high as long-term yields rose following the central bank’s policy tightening and its decision to reduce bond purchases for the first time in over a decade.
The yen could remain under pressure in the near term if risk appetite continues to rise and concern about Japanese debt persists. The market could react strongly to new data releases tomorrow and to the results of government bond auctions.
